The ManicaPost
THIS year’s Confederation of Zimbabwe Industries annual congress, which commenced in Mutare on Wednesday and ends today, has taken place on the back of a myriad of challenges facing the country’s industries.
The congress’s theme: “Taking Zimbabwe’s industry to the next level” focused on strategies aimed at triggering economic growth in different sectors of the economy in line with the Zimbabwe Agenda for Sustainable Socio-economic Transformation (Zim-Asset).
It is a fact that most of the country’s industries are struggling and in dire need of recapitalisation, but high interest rates and a fragile financial services sector had seen companies failing to access critical funding.
The Minister of Industry and Commerce, Cde Mike Bimha, saw first hand the state of industries in Mutare’s Nyakamete industrial area when he toured some of the distressed companies, that included Cairns Foods, and Quest Motors, before he officially opened this year’s CZI congress.
It was clear to the minister that the country’s manufacturing sector is in a dire state owing largely to shortages of capital, electricity and water. The truth is most companies are operating at under 40 percent of their capacity. Indeed, capacity utilisation has been reduced, in some accounts by alarming margins. The downstream effects has been underemployment, retrenchments, and reduced activity of the domestic economy.
The country has become increasingly dependent on imports mainly from neighbouring South Africa and China.
We commend the minister for touring both distressed companies and others such as Mutare Bottling Company, which are just managing to keep heads above the water. What he saw in Mutare serves as a microcosm of the bigger countrywide picture of the state of our industries.
And the tour, we believe, will go a long way in helping the minister to make informed decisions.
The CZI says the manufacturing sector alone needs at least $7 billion to prevent further collapse of firms that are currently plagued by an unrelenting liquidity crunch and softening consumer demand. With the exception of some companies that have managed to retool, using funds from shareholders, or short and medium-term loans from such banks as PTA Bank and Afreximbank and others through Distressed Industries and Marginalised Areas Fund (DIMAF), a vast majority of companies have no access to funding.
However, given the liquidity crisis stalking the country’s financial markets, Zimbabwean industries have a huge task mobilising required resources. Where loans are available, they are not only short term in nature, but attract exorbitant interest rates. The key issue is offshore money, wherever it comes from, it is badly needed.
Another challenge to the viability of manufacturing is unfair competition from foreign manufacturers who are able to supply like products on the local market. On one hand, those competitors enjoy the benefits of economies of scale, being able, with state-of-the-art technologies, to produce substantial quantities of products than Zimbabwean manufacturers.
In addition, some countries are providing subsidies to their manufacturers of very greater substance, generally considerably greater than prescribed by the World Trade Organisation (WTO), resulting in the selling prices being immensely reduced.
Endless representations to the Government have been made, and the minister this week pledged to visit the matter in order to eliminate that unfair and unjust competitive advantage.
The issue of excessive import duties imposed on many essential imports of the Zimbabwean manufacturers, including many material inputs and consumable spares, would be given due attention according to Minister Bimha.
It is hoped that Minister Bimha will honour the pledges he made to the congress, and that the congress would come up with concrete resolutions aimed at addressing the challenges besetting industries.
