Confederation of Zimbabwe Industries (CZI) chief executive officer Sekai Kuvarika says the country is gravitating towards de-industrialisation as the manufacturing sector’s capacity utilisation remains stagnant.
De-industrialisation is defined as the reduction of industrial activity or capacity in a region or economy, often because of a country or region shifting its economic focus away from manufacturing towards service-based industries.
In Zimbabwe’s case, the major reasons for capacity utilisation stagnation are the high cost of production, obsolete technology, lack of funding, policy inconsistencies, high taxes (compliance costs), electricity shortages, currency volatility, reduced export retention, and competition from the informal sector.
These reasons were revealed in CZI’s recent 2024 Annual Manufacturing Sector Survey Results.
Kuvarika was speaking during the International Business Conference held at the Zimbabwe International Trade Fair (ZITF) on Wednesday, under the theme ‘Revitalising Industrialisation for Zimbabwe’s Economic Resurgence’, with ZITF expected to end tomorrow.
She said when CZI looked at manufacturing performance trends, in the past four to five years, they had been trading around 50% capacity utilisation with no major movement recorded.
For the 2023 to 2024 period, she added, the movement had been quite marginal, about 0,9% difference in capacity utilisation.
“In terms of Gross Domestic Product (GDP) contribution, the question to ask is could it be an indication of de-industrialisation or its impact growth of other sectors which have seen the decline in manufacturing contribution to GDP?” Kuvarika said.
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“In comparison to other sectors, manufacturing is contributing less, it is trending downwards, and the rise is in the primary sector when we are talking about value addition which means we are not translating the growth in agriculture and mining sectors into value addition, which translate into manufacturing growth. There is missed opportunity on these.”
She said looking at the industrial ranking Zimbabwe scored poorly.
“When we look at the competitive industrial performance, Zimbabwe is number eight out of 12 in Southern Africa Development Community countries, and in Africa we are number 20 out of 39 countries that were ranked and globally we are number 124 out of 143 countries that were ranked,” Kuvarika explained.
“Clearly, I think that there is some element that we are trending towards de-industrialisation, and we need to revitalise our manufacturing sector and reindustrialise so that we can accelerate industrialisation.”
She said the manufacturing industry’s ability to produce and export was an area in which manufacturers were not doing well despite having capacity to do so.
Kuvarika revealed that policies should transform the manufacturing sector to make it contribute to economic growth.
“When we look at 2024, manufacturing sector survey results, we can see there has been no movement with the in the same range of performance,” she added.
She said there had been consistent increase in imports of consumer goods and decrease in capacity utilisation meaning the loss of the domestic market share for locally manufactured goods.
“The high rate of our import dependence across the manufacturing subsectors means that our participation in the regional and global value chains is limited,” Kuvarika said.
According to the CZI’s survey, there are an estimated 4 552 manufacturing firms with at least 10 employees in Zimbabwe.
From this amount, the output by manufacturing firms decreased by 0,5% in 2024 as capacity utilisation fell by 0,9% to 52,3% last year compared to 2023.
