The Sunday Mail
Kudakwashe Mutandi
THE manufacturing sector, which is currently operating at 36 percent, has been sourcing funds from external financiers to recapitalise and retool the industry.
It is believed that engaging foreign partners will help to bring in financial, intellectual as well as relational capital.
Much of the US$5 billion held by the local banking sector in deposits is mainly transitory and short term, and therefore loans have been too expensive to sustain the recovery of the manufacturing sector. Most companies are presently affected by inadequate funding.
Manufacturing is one of the country’s key economic sectors, contributing about 16,5 percent to the Gross Domestic Product (GDP). A country’s GDP effectively measures the sum value of goods and services produced by the country in a year.
Currently, Zimbabwe imports more than it exports.
Industrial lobby group Confederation of Zimbabwe Industries (CZI) says local industry needs at least US$8 billion as working capital. Of the amount, an estimated US$5 billion is required for the replacement of obsolete equipment. Last week, CZI president Mr Charles Msipa said companies have had to resort to offshore funding in order to ensure that they are competitive.
“Many CZI members have already and continue to initiate measures within their spheres of control to improve operating efficiencies, productivity, capacity utilisation to maintain employment levels, to expand markets, to offer more competitive pricing on their products and to upgrade their technology and equipment when they can secure affordable financing.
“Many member firms have been instrumental in negotiating and concluding strategic partnerships with foreign partners who bring financial, intellectual as well as relational capital,” said Mr Msipa.
He added that the industrial group has been complementing Government efforts to re-engage both the international community and multilateral institutions in order to achieve enhanced capital inflows and lines of credit for the productive sectors. A weakening South African rand, the high cost of doing business, infrastructure deficits and depressed demand on the domestic market are some of the factors that are affecting the competitiveness of local industry.
“The relationship, dialogue and engagement between policymakers and business membership organisations has improved significantly during the last five years. We have regular consultations with key economic ministries and monetary authorities, we provide input into policy reviews, we are increasingly in agreement on fundamental policy initiatives that are required to reverse the trend of de-industrialisation and Government has already implemented measures to afford relief and support to certain sub-sectors by curbing the influx of imported goods, including edible oils, dairy and other sectors.
“However, we still encounter “policy ambushes” and inconsistencies from time to time that serve to reduce confidence in our stewardship of the economy.
CZI is a business membership organisation that exists to promote an enabling business environment for the growth of the manufacturing sector.’’
The Ministry of Industry and Commerce has been spearheading some fundamental policy initiatives to reduce the cost and improve the ease of doing business in response to a wide ranging consultative exercise that involved input from the private sector.
