Prosper Ndlovu, Business Editor
Firms defy external shocks
Capacity utilisation jumps to 66%
Local goods dominate shelf space
Manufacturing exports soar
Sectoral GDP up 3%
Value chain strategy yields dividends
IMPROVED ease of doing business under the Second Republic led by President Mnangagwa has rejuvenated the country’s manufacturing industry leading to the creation of 100 000 new jobs in the sector alone between October 2021 and June this year, according to official data.
Developing a robust domestic manufacturing sector is one of the top priorities under the National Development Strategy (NDS1-2021-2025), which builds momentum towards the attainment of President Mnangagwa’s vision of an upper-middle-income status by 2030.
Under this thrust, Zimbabwe is pushing a comprehensive industrialisation agenda anchored on moving the economy up the value chains in order to realise structural transformation.
This has seen the Government instituting comprehensive fiscal and monetary policy review measures that have helped unleash a new lease of life to the productive sector across the spectrum.
Through accelerating the implementation, strengthening and domestication of value chains, the Government has set its focus on developing 10 priority value chains with higher potential to rapidly transform the economy and create massive job opportunities.
These include developing sustainable fertiliser, dairy, cotton, soya, leather, pharmaceuticals, iron and steel, sugar, bus and truck and plastic waste value chains.
The successful implementation of this strategy is envisaged to catapult Zimbabwe’s domestic supplies, reduce reliance on imports while boosting export earnings, with a higher potential to be realised under the African Continental Free Trade Area (AfCFTA).
Industry and Commerce Minister, Dr Sekai Nzenza, presented a detailed report on the state of the country’s industry at Tuesday’s Cabinet meeting where she highlighted major milestones achieved so far and the massive job creation impact.
Despite the disruptive exogenous factors such as the Covid-19 pandemic and geo-political tensions in Eastern Europe, Cabinet has expressed satisfaction with the strides being made by the manufacturing sector, which has become highly diversified, comprising 94 sub-sectors that produce up to 6 000 products, said Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa, in a post-Cabinet media briefing.
“The manufacturing sector contribution to GDP (Gross Domestic Product) increased from 15,7 percent in 2019 to 18,4 percent in 2021, with manufactured exports growing from US$383 million to US$404 million,” said Minister Mutsvangwa.
“NSSA data indicates that employment in the manufacturing sector grew from 1,3 million in October 2021 to 1,4 million in June 2022. Furthermore, manufacturing sector employment has increased by 1,4 percent during the first quarter of 2022 compared to the similar period in 2021.
“Industrial capacity utilisation re-bounded from 47 percent in the fourth quarter of 2020 to 66 percent in the similar quarter of 2021. Shelf-space occupancy has correspondingly increased from 55 percent in 2021 to the current 80 percent.”
The positive outcomes are a result of deliberate efforts by the Government working closely with the private sector.
For instance, through capacitating the Industrial Development Corporation of Zimbabwe (IDCZ), the Government has provided companies in the manufacturing sector with medium and long-term capital for industrial upgrading, modernisation and innovation.
For instance, Minister Mutsvangwa said the initial $24 million seed funds that were provided by Government have grown to a revolving fund of $2.2 billion.
“Over 2 000 jobs have been directly created and a further 7 000 preserved across the benefitting sectors. IDCZ declared a dividend to Government in 2021 for the first time in 12 years,” she said.
“Agro-based rural industrialisation, under which value addition and beneficiation industries are being established in provinces and marginalized areas with resource endowments.”
Among the notable success stories recorded by the sector, the minister made reference to the significant growth of the food and beverages sub-sector, which has expanded its capacity and increased output amid a jump in export figures.
Minister Mutsvangwa said the pharmaceuticals sub-sector’s capacity utilisation has risen from 12 percent to 45 percent while the number of players has increased from eight to 10.
She said the Covid-19 outbreak turned out to be an opportunity as local players used the lockdown window to expand operations by venturing into the production of PPEs and Covid-19 drugs, among others.
In the fertiliser sub-sector, Zimbabwe is rolling out its import substitution roadmap through beefing up domestic production capacity by local firms.
There have also been remarkable developments in the metals and electrical sub-sector, key among which is the establishment of the massive Dinson Iron and Steel Company project in Manhize, Midlands Province.
President Mnangagwa visited the project site a few months ago and was informed that the project will produce about 1,2 million metric tonnes of steel and create over 10 000 jobs through an investment of nearly US$60 billion in the long run.
Minister Mutsvangwa said the implementation of the 5-Year Dairy Sector Development Plan was similarly being accelerated.
She said the domestic production of raw milk, “has so far increased from 79,6 million litres in 2021 to the current 83 million litres.”
The sugar industry on one hand now enjoys excess milling capacity, which stands at around 600 000 metric tonnes per annum, while refining capacity is 240 000 metric tonnes per annum.
“The Sugar Act is being reviewed to consider sugar as a strategic crop, while engagements are being undertaken with key stakeholders to promote new investments and players in the sector,” said Minister Mutsvangwa.
To consolidate milestones achieved so far, the minister said manufacturing entities will continue being prioritised in the allocation of foreign currency at the Auction System to enable the entities to fund the retooling of their plants and machinery.
Going forward, Government expects that the increased exports will eventually eliminate the need for allocations of foreign currency, as the economy evolves towards a normal production and trading environment.
At the same time, the Government is working on unlocking the increased contribution of small and medium enterprises (SMEs), as well as the informal sector to industry performance. A report on this segment will be presented by mid-February, 2023, said the minister.
Meanwhile, in the commerce sector, she said service-driven industrialisation plays a significant role in the development of other sectors of the economy, which accounts for about 60 percent of the industry contribution to the country’s GDP.
“E-Commerce is now taking precedence in the retailing sector. There are massive expansions and establishments by retailers in fast-moving consumer goods, hardware, furniture, clothing and motor spares,” said Minister Mutsvangwa.
The successful establishment of the Consumer Protection Commission to operationalise the Consumer Protection Act, and the National Quality Policy, is also a milestone development for Zimbabwe as this promotes the production of quality products, as well as curbing the importation of sub-standard goods.
Article Source: The Chronicle