Manufacturing capacity utilisation down to 38pc

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CAPACITY utilization in Zimbabwe’s manufacturing sector declined 1.54 percent to 38.1 percent in the first half of 2014 from 39.6 percent during the comparative period last year mainly due to poor performance in the engineering and plastic sub-sectors.
A Confederation of Zimbabwe Industries (CZI) survey cited unreliable power supply, liquidity challenges and lack of value addition as major reasons for the decline.
It said cumulatively, capacity utilisation in the manufacturing sector had plummeted by 18.9 percent since 2011 when it hovered around 60 percent.
The CZI said the distress in the engineering sector was being worsened by the slow resumption of operations at the country’s steel maker, NewZim Steel which was recently acquired by India’s Essar Africa Holdings.
“As a result of unreliable power supply and poor infrastructure, the country is not gaining much on value addition,” said the report.
It said value addition had declined by 3.3 percent compared to the same period in 2013.
Decline in value addition, it noted, was indicative of a slowdown in production levels as a result of a number of challenges including poor performance of key enablers, shortage of working capital and prohibitive labour laws. 
Zimbabwe’s annual gross domestic product growth for 2014 was recently downgraded from a government target of 6.1 percent to 3.1 percent, the lowest growth rate since 2009. Advertisement