THE manufacturing sector capacity utilisation is projected to drop by 6% to 30% by year-end as influx of cheap imports is set to continue, the Industry and commerce deputy minister Chiratidzo Mabuwa has said.
That sector’s capacity utilisation is currently at an average of 36,3% from 39,6 in 2013. Mabuwa told more than 400 guests at the Zimbabwe International Trade Fair business conference in Bulawayo today.
The annual international business conference is held under the theme “Stimulating Exports: Seizing Opportunities to Accelerate Growth under ZimAsset.”
“The sector is on average operating at 36% capacity utilisation and this has led to a number of companies closing down, downsizing or retrenching,” she said.
“The worst affected sector includes food, pharmaceuticals, leather, construction, clothing and textiles.
“In the past four years under the multiple currency era, there has been an influx of imported goods and commodities onto the local market which has a direct effect on declining capacity utilisation
“Capacity utilisation is projected to drop by a further 6%t to an overall industry capacity utilisation of 30% by the end of the year,”
The deputy minister said non-competiveness of local companies is attributed to high cost of production emanating from high mark-ups meant to sustain high overheads. Capacity utilisation in the manufacturing industry had been trending downwards since 2012, weighed down by antiquated plant and machinery, cheap imports and high production costs, among other constraints.
According to the Confederation of Zimbabwe Industries, average capacity utilisation in the manufacturing sector declined from 44,9 % in 2012 to 39,6 % in 2013.
Capacity utilisation further declined by 3,3 percentage points, to 36,3 % in 2014.
However, she said there were sign of company recovery from the slump.
“On Monday I toured several companies in Bulawayo and firms such as the National Blankets are performing very well.
“Some companies under the judiciary managements are recovering and this is due to Dimaf (Distressed Industries and Marginalised Areas Fund),” she added.