The Confederation of Zimbabwe Industries (CZI) will today converge in Bulawayo to map out a strategy to reverse deindustrialisation as capacity utilisation in the manufacturing sector continues to tumble.
Experts say the country’s manufacturing sector whose capacity utilisation this year declined to 39,6% from 44,9% in prior year is in a precarious position with most companies having closed down, workers having been retrenched throughout all the sectors of the economy as companies fail to increase output.
They blame this trend on underfunding, antiquated equipment, high production costs and stiff competition.
According to the recent manufacturing survey conducted by CZI, companies are facing stiff competition from South Africa which is the country’s main trading partner.
Analysts contend that imports from neighbouring countries have filled supermarkets while local firms were contributing less to the final products found in supermarkets.
The CZI will hold its annual congress for three days under the theme “Imperatives for reversing industrialisation”.
Companies that have closed over the last five years include Karina Textiles, David Whitehead, Cairns Foods, Pine Products, PG Safety Glass and Mutare Board and Paper Mills.
The survey showed that business viability has improved in the past year although to a lesser extent it did not change.
The survey revealed that 60% of firms interviewed did not carry out new investments this year, but carried capital investments in machinery and equipment.
“The major reason for investment was to replace worn out machinery and equipment (47%) while 43% indicated that they wanted to expand their operations.
“The issue of capital investment has been critical and discussed widely, largely as a result of lack of capital to undertake such projects,” the report reads.
The source of funding for investment projects according to CZI came from ploughed back profits, followed by loans and foreign direct investments.
Despite being confronted by a host of constraints, the beverages sector has remained resilient to the economic challenges with companies such as Delta Corporation operating at near optimal capacity.