CZI: After growth in 2021, capacity utilisation may fall this year due to power cuts

Working during a power cut at Plaster Centre: CZI fears lower productivity

Industry capacity utilisation, which rose to its best levels in a decade last year, may fall in 2022 due to power cuts, the head of the Confederation of Zimbabwe Industries (CZI) fears.

In 2021, capacity utilisation – a measure of the productivity of factories – rose to 56.25%. This was the highest level since 2012, as companies benefitted from better power supply and increased investment into increasing production.

CZI had projected a further increase in capacity utilisation to 65% this year, but worsening power cuts are dimming those prospects, CZI president Kurai Matsheza says.

“In terms of capacity utilisation level for this year, we are going to register regression. I don’t know the level at this stage because it depends on how sustained these power cuts are going to be, is it going to be just for one month or to last until the end of the year. It depends on how quickly they resolve the problem,” Matsheza told Herald.

Power utility ZESA has recently warned of increased power cuts due to “depressed local power generation coupled by increased demand in winter and power import constraints”.

Unable to meet power demand, Zimbabwe is negotiating for 100MW from Mozambique. Zimbabwe has also begun talks with ZESCO of Zambia for a deal to import 100MW from Kafue Gorge Lower. Zimbabwe will have to make prepayments of US$6.3 million per month, according to ZESCO chair Vickson Ncube.

CZI says it wants to see these imports speeded up.

“We are actually going back and we hear stories that there is 300MW (imported power) we are not seeing; we have not seen it. From the utility, we don’t want to talk, we want power. So the power situation at the moment is really crippling,” Matsheza said.

CZI’s industry report for 2021 had raised some hope of recovery. According to the report, manufacturers produced 30% more goods than they did in 2020, selling 32% more units. Of those surveyed by CZI for the report, 37.8% had invested in increasing production capacity. In total, manufacturers invested US$147.1 million into their businesses. A total of 56% of the surveyed companies increased output in 2021.