The Confederation of Zimbabwe Industries (CZI) says that unless urgent decisive action is taken, capacity utilization in the country’s manufacturing sector will continue to decline.
In its 2012 Manufacturing Survey, the CZI said that utilization in the sector has declined from 57.2 % to 44.2 % mainly due to lack of funding, power and water shortages, and economic policy instability.
Capacity utilization is a concept in economics that measures the relationship between actual output produced and the potential output which could be produced by a business or a nation if its manufacturing equipment was fully utilized.
The report also bemoaned the flooding of cheap imports on the market as cause for the decline in manufacturing. Zimbabwe imports more than $6.5 billion worth of goods while exporting less than half that amount.
Economist Godfrey Kanyenze of the Labour and Economic Development Research Institute of Zimbabwe said obsolute machinery in most companies is forcing them to scale down their operations.
Kanyenze also said it was high time the government enforced anti-dumping laws to help resuscitate the ailing sector.
The European Commission this week started to impose anti-dumping tariffs on some products from China and Thailand after complaints by manufacturers that these countries were dumping their products in Europe at their expense.
Dumping is basically exporting a product at a lower price than what it is normally sold for at its home market.
Interview With Godfrey Kanyenze