THE Confederation of Zimbabwe Industries (CZI) chief economist Cornelius Dube says manufacturing is the only sector that is lagging, creating a gap between the industry and policy development.
This comes as the manufacturing sector is facing a plethora of challenges including foreign currency shortages, power cuts, low water availability and declining access to local capital.
According to Treasury, the manufacturing sector will be subdued at a 2,5% growth rate this year, from 2,6% last year. Treasury projects the sector to rebound by 3,7% in 2024.
Speaking on the second day of the CZI’s 2023 three-day annual congress yesterday, Dube said the commerce and industry sector was too dependent on imported inputs.
“The manufacturing sector is the only sector that is going down and the trend is very worrisome. This shows that there is a gap that is developing between the market and policy development. There is a need for a significant shift in policy development going forward. We need to move from consultation to ‘co-creation’,” Dube said.
“Most products that are being sold in the country are not locally produced. Moreover, the inputs that we are using are also coming from outside the country. That narrative needs to change. The industry is too dependent on imported inputs, and this is killing the manufacturing sector.”
A CZI survey released during the congress showed that in the outlook for the next three months, nearly 74% of manufacturers expect capital expenditure to rise with 42,11% projecting operating expenses to remain the same.
This has caused 57,89% of the businesses to expect their profitability to remain the same over the next three months with only 26,32% seeing an increase.
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However, 73,68% of manufacturers are expecting an increase in sales while 15,79% are projecting a decrease.
Industry and Commerce minister Sithembiso Nyoni said that there was a need to strengthen the manufacturing sector to tap into the opportunities presented within the region.
“The country’s economic recovery will be underpinned by structural transformation towards industrialisation which is critical for sustained economic growth and development,” she said.
“The draft Zimbabwe National Industrial Development Policy (ZNDIP) (2024-2030) is aligned with Vision 2030 and our industrialisation commitments within the region and on the continent. In this regard, the ZNDIP is seeking to grow and strengthen the manufacturing sector to tap into opportunities presented within the region, on the continent and beyond.”
Nyoni said the commercial sector, which is a significant contributor to the national gross domestic product and employment in the country, would also need to be strengthened to fully exploit trade opportunities within the African Continental Free Trade Area (AfCFTA).
Zimbabwe signed the agreement establishing the AfCFTA agreement in 2018 and subsequently ratified the agreement in 2019.
“Negotiations are ongoing for more sensitive products such as clothing and textiles, automotive, and sugar, which are expected to be finalised by this year in order to achieve 100% coverage rules of origin coverage,” Nyoni said.
AfCFTA is a free trade area encompassing most of Africa and was established in 2018, becoming the biggest trading bloc by members since the establishment of the World Trade Organisation in 1995.
AfCFTA is expected to grow Africa’s economy to US$66,4 trillion in the next 50 years.