Zimbabwean manufacturing firms were running at 57 percent of capacity as of mid-year, reflecting a robust recovery in the agricultural processing, food and beverages sectors, according to a new report from Confederation of Zimbabwe Industries.
The survey of more than 120 manufacturing firms showed a 13.5 percentage point rise in capacity utilization from June 2010 when companies were running at just 43.7 percent.
Manufacturing output rose 14 percent between mid-2010 and June 2011, the CZI said, but many companies are still struggling as capital remains scarce, much equipment is outdated and many raw materials are in short supply. Some firms are still failing.
Manufacturing received new investment of about US$43 million in the year through June, so some businesses were able to access working capital.
“In the first half of 2011, the percentage of respondents who undertook capital investments increased by five points to 47 percent,” the CZI report said.
But Trust Chikohora, past president of the Zimbabwe National Chamber of Commerce said electric power outages and a lack of capital continue to hobble businesses.
Masimba Kuchera of the Zimbabwe Coalition on Debt and Development said political uncertainty caused by chronic tensions in the country's national unity government and an indigenization program targeting foreign firms is crippling all business sectors. The black empowerment program has discouraged much-needed foreign investment, experts say.
Finance Minister Tendai Biti recently said the major challenge facing industries in the manufacturing sector is the high cost of capital and a shortage of investment.
Biti said the hardest hit industries are the textiles, leather, wood processing and metals sub-sectors which are finding it hard to withstand competition from imports.