Stagnation: Here’s what CZI’s new survey tells us about the state of Zimbabwe’s industries

Proplastics factory: Despite some expansion, companies under stress

The Confederation of Zimbabwe Industries (CZI), which represents the country’s manufacturers, has released its annual Manufacturing Sector Survey.

The report shows how manufacturing is stagnating, with its contribution to the country’s GDP falling. While manufacturers are investing more into their companies, output is not increasing.

Here are key takeaways from the survey.

Capacity utilisation has stagnated

Capacity utilisation, which measures roughly how productive a factory is, is down to 53.2% in 2023 from 56.1% in 2022 and 56.3% in 2021. Beverage manufacturers – such as Delta and Varun – are using the most capacity, at 61%, while capacity use is lowest in the paper sector, with just 36%. Manufacturers also created less jobs in 2023 than they did in 2022.

Manufacturing’s contribution to GDP is falling

In 2018, the manufacturing sector’s contribution to GDP was 14.8%. It has since fallen to just 9% in 2023. This is about half of what manufacturing was contributing to GDP in the 1980s and 1990s. Between 1980 and 1989, manufacturing contributed 23% to GDP on average. Tellingly, while manufacturing declines, trading – from wholesalers to retailers – now dominates GDP, according to Zimstat data. This shows the threat that local manufacturers are facing from cheaper foreign products dominating informal markets.

Manufacturers still investing more

Despite the odds, manufacturers bought more equipment in 2023 than 2022. The value of investment was US$128.7 million, up from US$101 million in 2022. In total, 46% of manufacturers invested in expansion, more than the 40% surveyed in 2022. However, reflecting problems with productivity, this did not translate into a significant increase in output.

How are manufacturers getting forex?

Last year, revenues for manufacturers was on average 65% in USD. Sone 76% of surveyed companies got their forex from their own sales. Only 12% got forex from the auction, which has since been dropped.

What they think about the economy

Asked if they think the economy will get better between 2023 and 2024, 47% of manufacturers said they were optimistic, while 30% expected it to get worse.

Most manufacturers don’t believe that Zimbabwe is ready for free trade. The African Continental Free Trade Area aims to open up trade among African economies, breaking down tariffs and increasing competition. Local industries, burdened by high production costs and reliance on the US dollar, do not believe they can compete.