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Zimbabwe industry body says manufacturing sector faces stagnation – The Zimbabwe Mail


The Confederation of Zimbabwe Industries (CZI) has released its annual Manufacturing Sector Survey, revealing a stagnation in the performance of the manufacturing sector and a declining contribution to the country’s GDP.

Despite increased investments by manufacturers, according to the NewZwire report, production has not seen a corresponding increase.

Key findings from the survey:

Decreased capacity utilization Capacity utilization, a key productivity measure for factories, fell to 53.2% in 2023 from 56.1% in 2022 and 56.3% in 2021. Beverage makers, including companies such as Delta and Varun, had the highest capacity utilization at 61%, while the paper sector. had the lowest with only 36%. Additionally, job creation in the manufacturing sector decreased in 2023 compared to 2022.

The contribution of the manufacturing sector to GDP falls The manufacturing sector’s contribution to GDP has fallen sharply from 14.8% in 2018 to just 9% in 2023. This is a significant decline from the 1980s and 1990s, when the manufacturing sector contributed on average 23% to GDP. The current dominance of trade, from wholesale to retail, in GDP underlines the challenges faced by local manufacturers as cheaper foreign goods flood informal markets.

Greater investment without production growth Manufacturers increased their investments in equipment in 2023, with total investment increasing to $128.7 million from $101 million in 2022. Even though 46% of manufacturers invested in expansion (up from 40% in 2022 ), this did not lead to a significant increase in production. , reflecting current productivity problems.

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Sources of currency In 2023, 65% of manufacturers’ revenues were made in dollars. About 76% of the companies surveyed earned foreign exchange from their own sales, while only 12% earned foreign exchange from the auction system, which has since been discontinued.

Economic outlook and business readiness When asked about their economic outlook for 2023-2024, 47% of manufacturers expressed optimism, while 30% expected economic conditions to worsen.

Furthermore, most manufacturers do not believe Zimbabwe is ready for the African Continental Free Trade Area (AfCFTA), which aims to increase intra-African trade by reducing tariffs and increasing competition. Local industries, burdened by high production costs and dependence on the US dollar, doubt their ability to compete effectively.

The CZI survey highlights the significant challenges facing Zimbabwe’s manufacturing sector, despite increased investments. The sector’s declining contribution to GDP and issues with capacity utilization and productivity indicate the need for strategic interventions to revitalize local manufacturing and improve its competitiveness in the global market.

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