Zimbabwe has been taking pride in the dominance of local products on store shelves, but a new report shows signs that the country’s manufacturing base may be shrinking.
The volume of manufacturing index, which measures output from manufacturers, was down 14.8% in the first quarter compared to the same period last year, according to new data from stats agency Zimstat. Compared to the last quarter of 2022, the index was down by 42.5%.
Two key manufacturing sectors, the food and the beverages sector, recorded drops in output between the December 2022 quarter and the first quarter of 2023. The foodstuff manufacturers’ index was down 37.6% from December, but managed a marginal year-on-year increase. The beverages sector index fell by 62.4% in the first quarter compared to last year, and 60.3% from the December quarter, a traditionally strong period for the sector.
A bright spot was the chemicals sector, where the output index increased by 269.6 when compared to the first quarter of 2022.
Government has projected a 2.5% growth in manufacturing this year. However, industries are under stress.
In April, a report by the Confederation of Zimbabwe Industries (CZI) said capacity utilisation, which gauges the productivity of factories, had remained largely unchanged in 2022 from 2021. Capacity utilisation was 56.1% from 56.5% in 2021, reflecting the stunted growth in the economy.
The CZI estimates that there are over 4,500 manufacturing companies who employ at least ten workers in Zimbabwe. While bigger manufacturers were able to increase capacity use, the CZI report found, many medium sized and smaller firms are struggling. An increase in power cuts and the impact of the tight liquidity in the market in the last half of the year affected operations for many manufacturers.
According to CZI, the companies surveyed for its report invested a combined US$101 million in their businesses last year, down from US$141 million in 2021.