HomeBusiness DigestCapacity utilisation plunges to 34%

Capacity utilisation plunges to 34%

ZIMBABWE’S industries are singing the blues as poor infrastructure, rampant corruption and depressed demand for local goods suppress manufacturing sector’s growth prospects.

Fidelity Mhlanga

This has seen industry’s capacity utilisation plunging from 36,5% in 2014 to 34,3% this year, according to the latest manufacturing sector survey. The sector has been struggling to stay afloat as capacity utilisation, which had risen to 57,2% in 2011 declined to 39,6% in 2013.

Launching the manufacturing sector survey on Wednesday, Confederation of Zimbabwe Industries (CZI) chief economist Dephine Mazambani-Mutafera said the sector was under severe threat due to dilapidated roads, poor rail network and incessant power cuts that have taken a toll on the operations of the manufacturing sector.

“Low local demand, competition from imports, high cost of doing business , capital constrains and antiquated machinery continue to affect the industry,” said Mazambani-Mutafera.

Rampant corruption is among the major factors affecting doing business in Zimbabwe. The CZI economist said depreciation of regional currency, such as the Zambian Kwacha and the South African rand has also affected companies who export their products into the neighbouring countries.

“There is pessimism in the economy and things are not going on very well. Inflation continues to run in the negative. It’s going into hyper deflation,” said Mazambani-Mutafera. Last year CZI introduced the weighted capacity utilisation as opposed to the average capacity. In terms of business viability, 46% of respondents indicated business has not been viable for the past year.

On the outlook, 89% respondents say the country will remain in deflation mode due to low Foreign Direct Investment (FDI) and liquidity challenges besetting the economy.

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