THE comprehensive economic reforms being undertaken by the Government are yielding a strong manufacturing rebound with several companies in Bulawayo and Midlands registering significant jump in capacity utilisation, as macro-economic stability yields positive results, according to the latest industry report.
Despite external shocks such as droughts and natural disasters, the country has in the last two years scored major successes on the economic reform front, which are stimulating investor appetite. While Covid-19 has disrupted traditional global value chains, lockdown measures have presented an opportunity for innovative local companies to step in and ramp up production for the local market.
Economic experts say the prevailing exchange rate stability, which has held at about US$1:ZWL$81 on the weekly auction platform would continue to sustain improved supply and availability of basic commodities at competitive and affordable prices.
Through the Government’s Transitional Stabilisation Programme (TSP 2018-2020), Zimbabwe has successfully implemented tough macro-economic reforms aimed at restoring fiscal and monetary stability, restoring investor confidence and enhancing the ease of doing business. These gains have kept local industry on a growth path with a cushioning impact on businesses amid the adverse impact of Covid-19.
Following the outbreak of Covid-19, the Government responded by unveiling an $18 billion stimulus package targeting the productive sector while the Ministry of Industry and Commerce facilitated issuance of exemption letters, which assisted companies to manufacture products for the local market and export.
The introduction of the Foreign Currency Auction System in June this year has also added impetus, presenting an efficient foreign currency market that facilitates the importation of essential raw materials by local manufacturers.
The manufacturing sector ideally requires up to US$100 million per month to import raw materials and on average, the auction system has been availing US$29 million per week, resulting in many positive stories coming out of the private sector.
In a media briefing focused on the manufacturing sector performance, price stability and foreign currency trading issued on Friday, Industry and Commerce Minister, Dr Sekai Nzenza, said the feedback from industry executives across the country was positive and highly encouraging.
“Overall, the manufacturing sector is on a strong rebound, anchored by a stabilising macroeconomic environment brought about by a stable exchange rate, supportive and predictable Government policies, political will and leadership, and synergy between Government and the private sector as evidenced by Government’s policy for a private sector led growth,” she said.
“The positive results in the manufacturing sector are fruits of the successful implementation of the Zimbabwe Industrial Development Programme (2019 – 2023) and the ministry’s strategic focus on increasing production and enhancing competitiveness, value addition and beneficiation of agricultural produce and minerals, developing and strengthening value chains; increasing job creation and export earnings, development of new enterprises; consumer protection, ease of doing business reforms and reducing cost of doing business; and increasing investments.”
Dr Nzenza said her ministry conducted a survey with various industrial sectors who have roundly commended the positive impact of the Foreign Currency Auction System among other reforms by the Government.
In Bulawayo she said a survey of 18 companies was carried out by the ministry in October 2020 covering sectors such as: food, beverages and tobacco, leather and leather products, textiles and clothing, metals and electricals, chemicals and packaging.
“The companies appreciated the Foreign Currency System, saying that it has reduced the challenges of accessing affordable foreign currency for the importation of raw materials and capital equipment. Currently, those surveyed companies have realised growth in capacity utilisation to 60 percent,” said Dr Nzenza.
“Companies from Bulawayo and Midlands province involved in the supply of fast-moving consumer goods (FMCG), metals and electricals, wood, timber and furniture and other subsectors have registered positive feedback.
“In addition, companies in the pharmaceutical sector like CAPS and Datlabs, have boosted their production of drugs for the local as well as export markets. Other companies like ZLG have responded to the Covid-19 pandemic and installed a new surgical mask production line.”
In the Midlands province, Dr Nzenza said giant shoe-maker, Bata Zimbabwe, Kwekwe-based Dendairy, Jinan, fertiliser producer, Sable Chemicals and Sino Zimbabwe Cement, have lauded the forex auction system for bringing about price stability, availability of funds for raw material/spare parts and most importantly increased confidence in developing medium and long-term plans on investments, innovation and working capital forecasts.
According to the report, industry executives are excited that the forex auction system has now made budgeting and planning feasible with expectation that the momentum registered so far can be sustained.
In the report, wholesalers have also testified that their stocking levels have significantly improved owing to stability brought about by the auction system resulting in genuine competition among retailers.
Similarly, giant players in the milling industry such as Blue Ribbon and National Foods have implored the Government to continue with the system since it has resulted in the stabilisation of the exchange rate as well as allowing companies access to affordable finance to fund import of crucial raw materials.
The FMCG sector is among the biggest beneficiaries of the reform process and forex auction system with cooking oil producer, Willowton, Crystal and Kefalos confirming receiving funds through the weekly forex auction platform. Exporters, packaging and chemical industries as well as small to medium enterprises have also credited the forex auction platform for bringing value to their operations.
Zimbabwe National Chamber of Commerce (ZNCC) past president and Davipel chief executive Mr Davison Norupiri, said the system had brought stability. He noted that the businesses were now able to pay their legacy debts and import raw materials on time.
“The system has also mitigated against the loss of money by bringing in a stable environment,” he said.
The improvement towards uninterrupted fuel supply has also come in handy and now business wants the Government to tackle electricity outages and ensure efficient water supply, which are equally key utilities in the value addition processes of the manufacturing sector.
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