The local manufacturing industry capacity utilization reached 56.25 percent in 2021, its highest mark since 2011 thanks to growth in investments into the sector since the economy re-dollarized, a report by the Confederation of Zimbabwe Industries (CZI) shows.
While 42.7 percent of the manufacturing sector accessed foreign currency for production from the Reserve Bank of Zimbabwe (RBZ)-run auction system, the majority of firms however got 66 percent of their US Dollars from sales.
The technological gap was glaring with just 47 percent of the firms investing in new technology indicating low levels of satisfaction.
According to the report, 37.8 percent of manufacturing sector undertook investments to increase production capacity amounting to US$ 147.2 million.
Notably, the inclusion of small scale players weighed down capacity utilization as they recorded 50.7 percent capacity against 62.7 percent from the large scale players.
The drinks and tobacco sector recorded the highest capacity utilization of 82 percent while the transport sector posted the least utilization of 33 percent.
As a result, the manufacturing sector registered an average increase in output of 30 percent in 2021
Furthermore, 57 percent of the firms in the manufacturing sector increased growth in sales with 28.2 percent recording a decrease in sales against 14.8 percent of firms whose sales maintained the same levels.
“There is need to ensure that the positive momentum gained in 2021 is maintained. It is important to ensure that the operating environment is stable, especially bringing finality to the currency and inflation challenges,” said CZI president Kurai Matsheza.
The report shows that 53 percent of manufacturing companies created new jobs in 2021 although this was partially offset by 16 percent of firms retrenching as the difficult economic environment forced entities to cut employment costs.
The sector encountered foreign currency availability challenges due to delays by the RBZ to disburse the funds from the auction despite promises by authorities to clear the backlog.
This was compounded by the export surrender requirements of both 20 and 40 percent which rendered exporting non-viable.
Furthermore, the 2 percent Inter mediated money transfer tax eroded margins for firms in the sector.
