HomeBusiness DigestFailing firms put under govt watch

Failing firms put under govt watch

GOVERNMENT says plans are underway to revive ailing companies, while encouraging investors to set up new firms as part of a strategy to restore the troubled manufacturing sector.

Manufacturing was the heartthrob of Zimbabwe’s economy before de-industrialisation turned the economy upside down from the year 2000.

According to Zimbabwe National Statistics Agency (Zimstat) quarterly Business Tendency Survey (BTS), the manufacturing sector capacity utilisation increased to 66% for the fourth quarter of 2021 amid indications of high optimism on economic rebound.

Industry and Commerce minister Sekai Nzenza told businessdigest that her office placed re-industrialisation drive among top priorities.

“In that regard, recognising that this is a private sector-led economic growth, stakeholders are implementing the value chains programmes focusing on iron-steel, which has shown resilience by operating at 50%. The other sectors are textiles, clothing and leather, metals and electricals, dairy, fertilisers, the motor industry and pharmaceuticals,” Nzenza told businessdigest.

“In this roadmap, focus will be to offer support in reviving ailing companies, assisting strategic companies and ensuring that proper policy framework interventions are implemented. Zida (Zimbabwe Investment Development Agency) has provided a list of companies that require investors, both ailing and new. The investment authority is marketing those companies,” she added.

Nzenza noted that provincial offices have been mandated to monitor the operations of ailing companies, which require government intervention.

“The 10 provincial offices have been mandated to assist in monitoring the operations of ailing companies and also assist in the identification of new companies that require government assistance,” she said.

“The US$8 billion Industrial and Commercial Sector Roadmap will play a vital role to increase manufacturing sector value-added products, generating foreign currency, and employment creation.

“The private sector has projects which the ministry will be monitoring. Rural industrialisation within the 10 provinces will see us working with other stakeholders in ensuring that we have new companies and revival of strategic companies at the provincial level,” Nzenza said.

According to the Confederation of Zimbabwe Industries (CZI), capacity utilisation was expected to rise to 61% in 2021, after another growth in 2020.

New 2021 data is expected to be released soon.

But despite firm closures necessitated by the need to contain the spread of the Covid-19 virus, the CZI’s 2020 Manufacturing Sector Survey said capacity utilisation, which measures how much of the combined factory capacity was being used, increased to 47% in 2020 from 36,4% in 2019.

For Zimbabwe’s economy, this development was a pleasant surprise because many thought that after the blanket closures there would be a massive negative impact on local industries.

The statistics demonstrated that with the right measures in place, in terms of imports, domestic firms can be bolstered by higher demand from the local market.

What government now needs to do is to balance between the demands of Africa that is progressively opening up its borders to intra-regional trade and the requirements of its home-grown producers.

It is a tricky balancing act, but one that can be done given that Zimbabwe would not be reinventing the wheel — this has already been achieved in trading blocs like the European Union.

According to Nzenza, the local content strategy would be accelerated in collaboration with Buy Zimbabwe to ensure that quality goods are produced.

Buy Zimbabwe is working with the ministry on a threshold of determining the local content thrust and publicising the concept, while the Competition and Tariff Commission (CTC) will spearhead the mergers and tariff reviews to ensure manufacturing growth.

Recent Posts

Stories you will enjoy

Recommended reading

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

NewsDay Zimbabwe will use the information you provide on this form to be in touch with you and to provide updates and marketing.