• Tue. Apr 23rd, 2024

Manufacturing industry capacity utilisation could fall below 70% – Report

ByEconomic Times

Jul 11, 2023

By ETimes

Capacity utilisation in Zimbabwe’s manufacturing sector could fall below the projected 70% this year owing to economic headwinds, a recent report shows.

Capacity utilisation measures the level at which a company is operating, or the level at which it is using its plant and equipment.

The development comes when there are high volumes of economic instability owing to an unstable exchange rate and rising inflation, which put major constraints on businesses.

Confederation of Zimbabwe Industries’ manufacturing report for 2022 showed that capacity utilisation remained stagnant at 56% due to power disruptions, currency shortages and hawkish policies.

“While the Industry and Commerce Ministry has set a target of 70% capacity utilisation in 2023, in the first half of the year the local operating environment was characterised by currency volatility, frequent power cuts and a tight monetary policy,” FBC Securities said in its latest first half of 2023 review and outlook report.

“Resultantly, we expect capacity utilisation to remain subdued and likely fall below the 70% target.”

Experts recommended that for meaningful policy change, authorities will have to focus on currency stability through control of the money supply and money supply growth.

Countries that have consistently implemented business environment changes have seen relatively positive economic performance, whereas those that have adopted a start-stop, start-stop strategy have suffered – Harare

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