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Zimbabwe manufacturing lagging as capacity utilisation declines

ZIMBABWE’S manufacturing activity is lagging amid a lack of investment to upgrade equipment, low demand for products and competition from better-priced imports, the Confederation of Zimbabwe Industries said.

Capacity utilisation dropped to 34,3% this year from 36,5% a year earlier on pressures “haunting” the southern African nation’s economy, the Harare-based industry association said in a report on Wednesday.

While a decision in 2009 to scrap the local currency in favor of mainly the U.S. dollar helped end hyperinflation, it’s eroded manufacturers’ competitiveness by making it cheaper to import goods. Pressures across the economy have re-emerged amid a drought and low commodity prices, with growth stagnating, businesses closing and deflation deepening.

Business confidence is plunging, the confederation said, citing an index it compiled. Businesspeople surveyed “feel pessimistic of the prospects of their companies and organizations,” said the group.

Deplorable State

The poor state of infrastructure and worsening power supply, which has led to electricity rationing, have added to production constraints, the confederation said.

Miners such as Anglo American Platinum Ltd. and Aquarius Platinum Ltd. have been asked to cut power consumption by 25% as the country’s ability to generate electricity falls following a drought that depleted water levels at its Kariba hydro-power plant.

Zimbabwe has the world’s second-largest deposits of platinum and chrome, after neighboring South Africa.

“Infrastructure remains in a deplorable state,” the CZI reported. About 90% of respondents in its survey said Zimbabwe’s infrastructure isn’t sturdy enough to sustain economic growth.-Bloomberg

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