News / Local
75% of Bulawayo's industrial plants idle
21 Mar 2021 at 04:36hrs | Views
THE battle to reposition Bulawayo as the heartbeat of Zimbabwe's industries appears to be hitting a brick wall.
Just when national manufacturing output is reportedly rising, Bulawayo's industrialists told Standardbusiness that up to 75% of combined industrial capacity in the former industrial hub is idle.
This means companies in Zimbabwe's second-largest city are only utilising a tiny portion of their machinery, about 25%, as they grapple to access affordable long-term loans to acquire advanced technologies and take on stiff competition posed by a flood of cheap imports.
The 25% falls far short of the 47% national capacity utilisation figure released by the Confederation of Zimbabwe Industries (CZI) two weeks ago.
It means as Bulawayo's companies are facing a bleak future, firms elsewhere are faring much better. The CZI projected the figure to rise to 61% this year, as firms return to full production in line with government's strategy to balance between fighting the Covid-19 pandemic and keeping industries running. Zimbabwe National Chamber of Commerce (ZNCC) vice-president Golden Muoni said the crisis that has haunted Bulawayo escalated once the Covid-19 pandemic hit the economy in 2020, with blanket lockdowns forcing companies to lock up and send staff home.
Production was halted and supply chains were disrupted, Muoni told Standardbusiness.
This was the situation across the entire country. But what made Bulawayo's case unique was that this was only a new angle to a problem that had troubled the city ever since Zimbabwe's downturn emerged in 2000.
There has been little or no respite since then, with a spectre of job losses, capital flight and forced migration highlighting how authorities have failed to deal with a crisis that may cost little or no money to resolve.
A few free actions that may be taken to save Bulawayo's industries include reviewing policies and tariffs and fees.
"Covid-19 came at a time when the trajectory was to revive industry and disrupted the whole plan of trying to revive the industry," Muoni said.
"We are looking at not more than 30% of capacity utilisation. We are looking at about 25% to 30%. But by the end of the year, if we are not hit by a third wave, we might end at about 40% to 45% capacity utilisation," the ZNCC chief told Standardbusiness.
"Our economy is 70% to 80% informal. The balance is the formal economy. The coronavirus disrupted the informal ecosystem, which has not been working. This affected the other economy, because that informal economy is an economy on its own which also feeds into the formal economy. Where other parts of the economy are allowed to operate because of its informality, it affects disposable incomes," Muoni said.
Bulawayo has been reeling under the effects of a decade-long chronic de-industrialisation that has seen over 100 firms, mostly in the manufacturing sectors, shutting down.
That was even before the pandemic struck.
The list of firms that have collapsed under the weight of foreign currency shortages, a power crisis, capital flight and diminishing disposable incomes includes some of Zimbabwe's household names.
True Value, Label Fashion, Suntosha Leisure Wear, Lancaster, Harren Manufacturing, Ascot, Belmor Fashions, Cinderella, Textile Mills and Rusglen Fashions immediately come to mind.
But even those that still remain, such as the National Railways of Zimbabwe, Cold Storage Company, Merlin or Merspin, Marvo Stationery, Wetblue and Rubber Products Manufacturers have been affected by the dislocations that have stemmed out of the fall of their peers.
Several efforts have been made to revive industries in Bulawayo, but with little success.
In 2011, the ministry of Industry and Commerce arranged a multi-million dollar funding window with a financial institution under the Distressed and Marginalised Industries Fund (DIMAF) to bankroll the recovery of industries, especially in Bulawayo.
DIMAF was either looted by bigwigs or used by executives to purchase fast cars and build hilltop mansions.
While government made a lot of noise about this, no one has been arrested or punished.
Last year, government unveiled an $18 billion Covid-19 relief package to help firms affected by economic closures.
Nothing was realised.
CZI Matabeleland chapter president Shepherd Chawira said Bulawayo's crisis had been compounded by delays by the Reserve Bank of Zimbabwe to release funding from the foreign currency auction system after every allotment.
However, the foreign currency auction system has been largely credited for saving Zimbabwe's industry after being established in June last year, when parallel market rates were running riot.
Still, it means had the central bank effected the release foreign currency on time, it would have made a much bigger impact than it has made today.
"The increasing stability that we are experiencing has been brought about by the introduction of the foreign currency auction system," said Chawira.
"The fuel supply situation has improved; power to a larger extent has improved though of late we have been experiencing load-shedding. We are just praying that the current state of industry persists. If the stability that we are experiencing at the moment persists, we will have growth," he added.
"Delays (in releasing foreign currency) have affected raw material importation. It's taking up to six weeks and at times even more. We have members who have gone up to six weeks or slightly more, which means foreign currency has not been remitted to their suppliers. It creates a gap in terms of supply of raw materials. We have experienced serious delays of movement of goods at the borders," he added.
The central bank said it has agreed with banks to release allotted funds within two weeks.
Industrialists emphasised the need for companies to embrace new technologies in order to boost their competitiveness.
Chawira said they were looking forward to assisting the government on the vaccination programme so that they avoid more business disruptions due to Covid-19.
"We have offered to vaccinate employees and their spouses, just to assist the government in the vaccination programme. We are waiting for the government to give guidance in terms of the vaccines which they have approved," he said.
This strategy has been adopted by a few countries in Asia, where industrialists have said by protecting workers, they would also be protecting their companies.
"Our position as business is that we want to request the government to allow business to import any World Health Organisation-approved vaccines. It is better to invest in vaccination than to lose business through lockdowns. We are more than willing to support the government," Chawira said.
Under a government-sponsored vaccination programme that kicked off last month, close to 40 000 frontline workers have been inoculated.
Just when national manufacturing output is reportedly rising, Bulawayo's industrialists told Standardbusiness that up to 75% of combined industrial capacity in the former industrial hub is idle.
This means companies in Zimbabwe's second-largest city are only utilising a tiny portion of their machinery, about 25%, as they grapple to access affordable long-term loans to acquire advanced technologies and take on stiff competition posed by a flood of cheap imports.
The 25% falls far short of the 47% national capacity utilisation figure released by the Confederation of Zimbabwe Industries (CZI) two weeks ago.
It means as Bulawayo's companies are facing a bleak future, firms elsewhere are faring much better. The CZI projected the figure to rise to 61% this year, as firms return to full production in line with government's strategy to balance between fighting the Covid-19 pandemic and keeping industries running. Zimbabwe National Chamber of Commerce (ZNCC) vice-president Golden Muoni said the crisis that has haunted Bulawayo escalated once the Covid-19 pandemic hit the economy in 2020, with blanket lockdowns forcing companies to lock up and send staff home.
Production was halted and supply chains were disrupted, Muoni told Standardbusiness.
This was the situation across the entire country. But what made Bulawayo's case unique was that this was only a new angle to a problem that had troubled the city ever since Zimbabwe's downturn emerged in 2000.
There has been little or no respite since then, with a spectre of job losses, capital flight and forced migration highlighting how authorities have failed to deal with a crisis that may cost little or no money to resolve.
A few free actions that may be taken to save Bulawayo's industries include reviewing policies and tariffs and fees.
"Covid-19 came at a time when the trajectory was to revive industry and disrupted the whole plan of trying to revive the industry," Muoni said.
"We are looking at not more than 30% of capacity utilisation. We are looking at about 25% to 30%. But by the end of the year, if we are not hit by a third wave, we might end at about 40% to 45% capacity utilisation," the ZNCC chief told Standardbusiness.
"Our economy is 70% to 80% informal. The balance is the formal economy. The coronavirus disrupted the informal ecosystem, which has not been working. This affected the other economy, because that informal economy is an economy on its own which also feeds into the formal economy. Where other parts of the economy are allowed to operate because of its informality, it affects disposable incomes," Muoni said.
Bulawayo has been reeling under the effects of a decade-long chronic de-industrialisation that has seen over 100 firms, mostly in the manufacturing sectors, shutting down.
That was even before the pandemic struck.
The list of firms that have collapsed under the weight of foreign currency shortages, a power crisis, capital flight and diminishing disposable incomes includes some of Zimbabwe's household names.
True Value, Label Fashion, Suntosha Leisure Wear, Lancaster, Harren Manufacturing, Ascot, Belmor Fashions, Cinderella, Textile Mills and Rusglen Fashions immediately come to mind.
But even those that still remain, such as the National Railways of Zimbabwe, Cold Storage Company, Merlin or Merspin, Marvo Stationery, Wetblue and Rubber Products Manufacturers have been affected by the dislocations that have stemmed out of the fall of their peers.
Several efforts have been made to revive industries in Bulawayo, but with little success.
DIMAF was either looted by bigwigs or used by executives to purchase fast cars and build hilltop mansions.
While government made a lot of noise about this, no one has been arrested or punished.
Last year, government unveiled an $18 billion Covid-19 relief package to help firms affected by economic closures.
Nothing was realised.
CZI Matabeleland chapter president Shepherd Chawira said Bulawayo's crisis had been compounded by delays by the Reserve Bank of Zimbabwe to release funding from the foreign currency auction system after every allotment.
However, the foreign currency auction system has been largely credited for saving Zimbabwe's industry after being established in June last year, when parallel market rates were running riot.
Still, it means had the central bank effected the release foreign currency on time, it would have made a much bigger impact than it has made today.
"The increasing stability that we are experiencing has been brought about by the introduction of the foreign currency auction system," said Chawira.
"The fuel supply situation has improved; power to a larger extent has improved though of late we have been experiencing load-shedding. We are just praying that the current state of industry persists. If the stability that we are experiencing at the moment persists, we will have growth," he added.
"Delays (in releasing foreign currency) have affected raw material importation. It's taking up to six weeks and at times even more. We have members who have gone up to six weeks or slightly more, which means foreign currency has not been remitted to their suppliers. It creates a gap in terms of supply of raw materials. We have experienced serious delays of movement of goods at the borders," he added.
The central bank said it has agreed with banks to release allotted funds within two weeks.
Industrialists emphasised the need for companies to embrace new technologies in order to boost their competitiveness.
Chawira said they were looking forward to assisting the government on the vaccination programme so that they avoid more business disruptions due to Covid-19.
"We have offered to vaccinate employees and their spouses, just to assist the government in the vaccination programme. We are waiting for the government to give guidance in terms of the vaccines which they have approved," he said.
This strategy has been adopted by a few countries in Asia, where industrialists have said by protecting workers, they would also be protecting their companies.
"Our position as business is that we want to request the government to allow business to import any World Health Organisation-approved vaccines. It is better to invest in vaccination than to lose business through lockdowns. We are more than willing to support the government," Chawira said.
Under a government-sponsored vaccination programme that kicked off last month, close to 40 000 frontline workers have been inoculated.
Source - The Standard
