Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

***The views expressed in the articles published on this website DO NOT necessarily express the views of the Commercial Farmers' Union.***

Reviving Zim industry

Reviving Zim industry

November 9, 2012 in Opinion

It is widely known that one of the key areas of Zimbabwe’s embattled economy 
that has become very weakened is the manufacturing sector.

Report by Eric Bloch

The decimation of industry has occurred nationwide, but has had a marked 
impact upon the industrial sector of Bulawayo, which for long has been the 
hub of Zimbabwean industry.

Bulawayo had far more manufacturing enterprises than other cities or towns.

Industry was not the sole contributor to Bulawayo’s economy, for the city 
also benefitted extensively from tourism, the distributive sector (wholesale 
and retail) and service provision. However, proportionately, other cities 
and towns have suffered similar industial decimation since 2008.

Of the many causes of Zimbabwe’s industrial decline, foremost was the 
hyperinflation that peaked in 2008, when prices were rising by an average of 
98% per day.

It is that hyperinflation which denuded almost every manufacturing 
enterprise of its essential working capital — vital to fund stock-holdings 
and to fund operational, marketing, distribution, and administrative costs.

By 2009, every industrial business required trillions of dollars to maintain 
operations effectively. However, access to working capital was virtually 
impossible. Banks and other financial institutions had minimal resources to 
fund the borrowings necessary for industry to re-establish its working 
capital base.

What miniscule funding the banks could make available was for untenably 
short periods, wholly unaligned to the industrial needs, and only made 
available at substantially high rates of interest and allied charges.

Alternative sources of accessing working capital, being new investment into 
the enterprises was rarely available.

Because of hyperinflation, domestic investors had been stripped of 
investment capital, while foreign investors were deterred from investing in 
Zimbabwe by the draconian, ill-conceived and structured laws of 
indigenisation and economic empowerment, as well as by the overall political 
and economic instability which prevailing.

The gross insufficiency of capital further impacted negatively on Zimbabwean 
industry by precluding industrialists from being able to replace plant, 
machinery and equipment timeously.

This failure to operate the latest, state-of-the-art technologies, adversely 
affected local industry’s ability to be market-competitive against products 
manufactured externally. The antiquated machinery of most Zimbabwean 
industries negatively affected productivity and quality.

Another debilitating constraint on manufacturing has been, and continues to 
be, the frequent non-availability, or erratic availability of essential 
utilities, as electricity and water, compounded by the exceptionally high 
costs of such utilities.

Not only are the advertised load-shedding schedules not adhered to, but in 
addition, there are inumerably frequent supply interruptions. These cause 
loss of production, and in some instances, irreparable damage to 
manufacturing inputs and especially in the pharmaceutical, food processing, 
and textile industries.

Another impediment to the viability of manufacturing is unfair competition 
from foreign manufacturers who are able to supply like products.

On the one hand, those competitors enjoy the benefits of economies of scale, 
being able (with state-of-the-art technologies) to produce substantial 
quantities of products than Zimbabwean industrialists.

In addition, some countries are providing subsidies to their manufacturers 
of very greater substance (generally considerably greater than prescribed by 
the World Trade Organisation (WTO)), resulting in the selling prices being 
immensely reduced.

Despite endless representations to Zimbabwe’s government, import tariffs are 
not imposed at levels which would eliminate that unfair and unjust 
competitive advantage. Concurrently, excessively great import duties are 
imposed upon many essential imports of the Zimbabwean manufacturers, 
including many material inputs and consumable spares, further minimising the 
ability of manufacturers in Zimbabwe to be price-competitive.

Aligned to such negative and debilitating fiscal policies is absence of 
export incentives, albeit such incentives should be consistent with the 
provisions of Gatt. It is long overdue and necessary that Minister of 
Finance and parliament ensure the provision of equitable and effective 
export incentives and the re-creation of export processing zones, as well as 
constructive revision of import policies and tariffs.

Industrial viability is also severely prejudiced by the never-ending delays 
in clearing imports at Zimbabwe’s border posts. They are neither adequately 
structured or staffed to ensure timeous clearance of imports. All too often 
goods being held up for many days, and sometimes weeks, before being 
cleared. This impedes industrial productivity and exacerbates cash flow 

It is also all too frequent that customs officers of the Zimbabwe Revenue 
Authority (Zimra) deliberately create impediments and delays to customs 
clearance in order to motivate the offering of bribes, although fortunately 
this does not pertain to all Zimra personnel.

Some in government have recognised certain of the restraints confronting 
industry and have taken some limited actions to address them, such as the 
creation of the Distressed Industries and Marginalised Areas Fund, although 
the funding thereof is grossly inadequate. The selection of recipients of 
funding is not transparent and the loan conditions are unduly burdensome.

If government is genuinely intent on a substantive recovery of the economy, 
and of achieving ongoing real growth, with the concomitant reduction of 
nationwide poverty, creation of employment and meaningful national 
well-being, all of these hindrances to the success of the manufacturing 
sector must be urgently and constructively addressed.


Tobacco sales fetch US$258m

Tobacco sales fetch US$258m    Herald 3/7/2020 Herald Reporter Tobacco sales have reached 110 million kilogrammes worth US$258 million, with deliveries to contract companies and

Read More »

Agric tops micro-finance loan book

Agric tops micro-finance loan book  Herald 12/9/2019   Mr Chitambo Fradreck Gorwe Business Reporter Good rains anticipated countrywide during the 2019/20 farming season, have seen agriculture

Read More »

New Posts: