By Stephen T Chifamba
Harare, Zimbabwe (News of The South) – The Confederation of Zimbabwe Industries (CZI) has unveiled its latest annual manufacturing sector report, revealing a concerning state of affairs within the country’s manufacturing sector.
Based on a comprehensive survey encompassing 355 industries, the report paints a vivid picture of stagnation and operational hurdles faced by manufacturers.
In 2024, Zimbabwe’s manufacturing capacity utilization stood at a sobering 52.3%, marking a decline from 56% recorded in 2021.
This statistic underscores a troubling reality: nearly half of the country’s industrial capacity remains idle, indicative of significant underperformance across the sector.
Coupled with a marginal 0.5% decrease in overall manufacturing output for the year, these figures highlight persistent challenges hampering sectorial growth.
One of the most glaring issues identified in the report is the limited international competitiveness of Zimbabwean manufactured goods. Merely 5% of total manufacturing output is geared towards exports, a figure largely attributed to elevated production costs and fierce competition posed by cheaper imports.
The stringent forex retention policy further compounds these challenges, limiting the ability of local manufacturers to capitalize on foreign markets effectively.
Aging infrastructure poses another formidable obstacle, with the average age of Zimbabwe’s manufacturing plants currently standing at 17 years. Alarmingly, 30% of these facilities are more than two decades old, underscoring the urgent need for revitalization and modernization efforts within the sector.
In contrast, newer and larger factories established in the past five years have shown more promising performance indicators, hinting at the potential benefits of strategic investments in modern industrial infrastructure.
Looking ahead, CZI’s survey reveals cautious sentiments regarding Zimbabwe’s readiness for the African Continental Free Trade Area (AfCFTA).
A significant 42% of manufacturers express skepticism about the country’s preparedness to compete effectively under the regional trade agreement. High production costs emerge as the primary concern, followed closely by outdated equipment and burdensome tax regimes, which collectively threaten to impede Zimbabwe’s integration into broader African markets.
In terms of foreign exchange management, an overwhelming majority (83%) of Zimbabwean industries now rely on internally generated forex from sales activities.
This stands in stark contrast to the meagre 8% sourcing forex from the official market, reflecting enduring challenges associated with accessing foreign currency through traditional channels.
Notably, the prevalence of forex sourced from the black market has dwindled significantly, dropping from 15% in 2023 to a mere 3% by the end of 2024, indicative of evolving dynamics in the country’s forex landscape.
Conclusively, while Zimbabwe’s manufacturing sector faces formidable obstacles stemming from inadequate capacity utilization, aging infrastructure, and competitive disadvantages on the global stage, the emergence of newer industrial entities offers a glimmer of hope for potential revitalization.
Addressing these challenges will require concerted efforts from both public and private sectors to foster an environment conducive to sustainable growth and enhanced international competitiveness.
This report underscores the imperative for strategic policy interventions and targeted investments aimed at rejuvenating Zimbabwe’s manufacturing landscape, thereby positioning it more robustly within the evolving regional and global economic frameworks.
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