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Capacity utilisation falls to 30 percent: CZI
10/06/2014 00:00:00
by The Source
 
Companies struggling due to a critical shortage of liquidity ... Industry minister Mike Bimha
 
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Zimbabwe’s manufacturing capacity utilization – a measure of the extent of factories’ use of their installed productive potential – is expected to fall by almost ten percentage points to around 30 percent in 2014, an industrial body has said.

The Confederation of Zimbabwe Industries (CZI), which conducts an annual capacity utilisation survey, says its 2014 report was likely to show further decline from the average 39.6 percent levels registered last year.

CZI Mashonaland chamber president Sifelani Jabangwe told The Source that capacity across sectors was not expected to improve due to the decline in aggregate demand.

The current 30 percent of capacity for companies in Mashonaland “is likely to be reflective of the national average capacity utilisation because most of the companies (that have remained open) are in the province,” said Jabangwe in an interview during a CZI-organised tour of several plastic packaging manufacturers on Friday.

This would be the third straight year of declining manufacturing capacity in Zimbabwe. Capacity fell to 44.2 percent in 2012 from 57 percent in 2011.

Zimbabwean companies have in the past decade struggled due to a critical shortage of liquidity, increased foreign competition and low consumer demand.

Resultantly, numerous companies heavily downsized while others closed. Statutory pension fund, the National Social Security Authority (NSSA) reports that 700 firms have shut down since 2011, costing up to 10 000 jobs.

The CZI manufacturing report is the most comprehensive private-sector led survey, which assesses industrial performance.

At least 15 economic sub-sectors are surveyed, including clothing and textile, pharmaceuticals, grain and milling, oil among other industrial manufacturing activities.

The 2013 CZI report showed key challenges that affected industry included working capital constraints, power and water shortages and high costs, ageing equipment and machine breakdowns and low domestic demand.



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