CZI, Govt to work on forex shortages

The Confederation of Zimbabwe Industries (CZI) is expecting the manufacturing industry to work closely with the Government on foreign currency allocations to avert food shortages, improve capacity utilisation and reduce cheap imports.

The move is expected to boost local industry as the Government through Reserve Bank of Zimbabwe, has agreed to prioritise the manufacturing sector.

This comes after the manufacturing industry and retail industry have suffered a severe foreign payments backlog due to lack of access to foreign currency.

CZI president Sifelani Jabangwe, told The Herald Business that a close working relationship will enable Government to release money for raw materials.

"Private sector is expecting to work closely with Government on ways to tackle the liquidity crisis to avert food shortages. Quick release of money to the manufacturing sector will make the country spend less and less money on cheaper raw materials than food imports.

"We expect to see more support for local industries on a sector – by-sector basis to further boost the economy and reduce import dependence and stimulates exports. This should be a Government-private sector effort," said Mr Jabangwe.

Though the country had experienced one of the best agriculture season in years, the capacity utilisation dropped to 45,1 from 47,4 percent owing to limited raw materials.

Capacity utilisation is expected to be nearly 50 percent this year, but access to foreign currency and normal rainfall patterns till the end of the season, will be crucial in the growth.

"The capacity utilisation hasn't been improving that much since 2016 due to foreign currency shortages therefore there is need to address that area.

"The increase in capacity utilisation to around 48 or 49 percent will only depend on the availability of the currency to the manufacturing sector.

"Given the current rainfall patterns, the agriculture sector and its value chains will benefit immensely hence the industry's capacity may increase on that note," said Mr Jabangwe.

Lack of foreign currency and delays in telegraphic transfer payments for critical raw materials have caused the basic commodities price hikes.

While some retailers say it is taking up to two weeks for telegraphic transfers to reflect in their suppliers' accounts, industry representatives last week said some transactions that were originated as far back as last year August are still outstanding.

Resultantly, imports of both finished products and raw materials have been adversely affected.

Mr Jabangwe said there is also need to come up with concrete strategies to settle debts owed to international money lenders in order to unlock fresh lines of credit and create fiscal space.

This will help the industry to retool and re-equip.

Capacity utilisation was at the   peak at 57,2 percent in 2011, before dropping to 44,2 percent in 2012, 39,6 percent in 2013 and 36,3 percent in 2014.

The industrial body conducts the most comprehensive private sector-led survey, which assesses industrial performance.

At least 15 economic sub-sectors are surveyed, including clothing and textile, pharmaceuticals, grain and milling and oil processing.

An Italian delegation is expected in the country before year end  to scout for areas of investment and the delegation will be led by Confindustria — the employers' confederation and the national chamber of commerce — is based in the Italian city of Reggio Emilia.