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Massive companies closure loom as industry productivity drops to 27 % – CZI

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By Alois Vinga

A top economist says industrial capacity utilisation could decline to 27 % this year if government does not take a step to dumping its destructive policies.

Confederation of Zimbabwe Industries (CZI), chief economist, Tafadzwa Bandama made the remarks while presenting CZI’s 2019 Manufacturing Sector Survey in Harare recently.

“The decline signifies 9.4 % decrease from the actual obtained for 2019 and this is an eye opener calling for an urgent shift in policy direction.

“At such, a level of capacity utilisation, some companies would have closed down with unemployment, rising poverty and critical shortages,” Bandama said.

According to the report, capacity utilisation declined by 11.8 % to 36.4% in 2019, down from 48.2% that was recorded in 2018.

The top economist said their research hints on a gloomy picture characterised by reduced export volumes, ever rising foreign currency shortages and, more worrisome, being the emergence of a restive populace.

The findings by the nation’s leading manufacturers’ business member group comes at a time when the country is going through a dark page with inflation reaching a ten year high amid devastating effects of a crippling drought which has left 5.7 million people food insecure.

A raft of policies being implemented by Finance Minister, Mthuli Ncube to stabilise the ailing economy have instead made the situation tougher for both the business community and general public.

Under the measures, government last year, introduced the interbank market for easier trade of foreign currency with a hope to stimulate productivity.

However, the CZI report established that 88% of firms still indicate that they find it difficult to access forex at the market with 37% indicating that they have to wait for more than three months to access forex.

“Out of the surveyed, 61% said the interbank is ineffective due to forex unavailability, 24 % say there is need to improve the market, 6% said the problem delays imports and in turn, increases cost of doing business and others believe it is benefitting the corrupt,” the report said.

It was established that a sizeable number of firms cannot easily access funding from banks owing to collateral demands while the majority of available financiers lack the funds.

The manufacturers also bemoaned the absence of a local airline, unavailability of an efficient railway line linking the markets to ports, water shortages, poor road infrastructure, power cuts and shortages.

Another observation showing that the business community’s confidence is at its least ebb is revealed by the finding that 78% of the firms predicted the economy will be in a recession in 2020 with 92% projecting the persistence of the inflation mode.