Capacity utilisation report misleading, say experts

ECONOMIC experts say the 13 percent increase in manufacturing capacity utilisation this year should translate to increased job opportunities.

Participants at a tax seminar held in Bulawayo yesterday, said the 2016 manufacturing survey report by the Confederation of Zimbabwe Industries (CZI), which indicated that capacity utilisation had increased to 47,4 percent up from 34,3 percent, would not be credible if it does not translate into more jobs.

The Institute of Chartered Secretaries and Administrators organised the seminar, which sought to interrogate the tax reforms and economic implications of the 2017 national budget.

Employers Confederation of Zimbabwe (Emcoz) president Mr Joe Kahwema said Statutory Instrument 64 of 2016, which controls importation of locally available products, has not resulted in the creation of more jobs despite contributing to increased capacity utilisation.

"We have witnessed a jump in capacity utilisation but that has not been matched by job creation," he said.

Mr Kahwema said the increased capacity utilisation should have seen companies re-engaging some of the retrenched workers.

"We have not re-engaged the people we retrenched during the Zuva judgment (in July 2015).

"So the question now is who benefited from the increased capacity utilisation ?"

Mr Kahwema said it is only companies producing products whose importation was banned by S.I 64 that benefited hence the increase in capacity utilisation was not recorded by all companies.

The Supreme Court last year ruled that companies can lawfully terminate their employees' contracts after giving a three months notice.

The ruling saw more than 25 000 employees lose their jobs and this prompted Government to intervene and amend the Labour Act which now compels companies to pay workers a severance package whose minimum has been packed at two weeks salary for every year served.

Mr Kahwema said while S.I 64 resulted in increased capacity utilisation for some companies, what was worrying was that these companies being protected by a Government policy were increasing prices taking advantage of lack of competition from imports.

He said these companies could not hide behind production costs because salaries had remained the same.

An economist and senior lecturer at Solusi University Dr Bongani Ngwenya concurred saying the report on capacity utilisation was misleading hence it should be looked at from a company level as opposed to a macro-economic level.

"I am disputing the increased capacity utilisation because it is not all companies that are benefiting from S.I 64," said Dr Ngwenya.

S.I 64 was promulgated in June as a protectionist measure for local industry, which restricts the importation of goods that Zimbabwean industries can produce.