HARARE-At least 65 percent of Zimbabwe’s industrial manufacturing capacity was idle in 2019, weighed down by foreign currency and power shortages, according to the Confederation of Zimbabwe Industries (CZI).
Zimbabwe’s biggest business lobby said on Friday industries operated at 36,4 percent of installed capacity during the period, from 48,2 percent the previous year.
But the troubles facing the country’s industries is expected to worsen this year, with CZI projecting capacity to slide further to 27 percent.
“Capacity utilisation declined by 11,8 percentage points to 36,4 percent in 2019 from 48, 2 percent that was recorded in 2018,” said CZI.
“2019 projection was -34, 3 percent. Foreign currency shortages and availability is the underlying challenge,” it noted.
The report said 11 manufacturing sector subsectors surveyed operated above 50 percent of installed capacity.
“Foreign currency is the root cause of poor performance,” said Tafadzwa Bandama, chief economist of CZI.
“Our economy is evolving around shortages of foreign currency. At 27 capacity utilisation levels some companies would have closed down with follow on effects: unemployment, shortages of goods and services,low export volumes,shortages of of Foreign Currency, a restive population,” Bandama said, suggesting that government, as the biggest consumer of goods and services must support a local content campaign being pursued by industries to save companies.
“We are trapped in a low growth equilibrium, we need to get out of the equilibrium. We also need to get out of low output to grow the economy, she noted.