WITH just over two weeks left before the end of the year, the capacity utilisation target of 60 percent that was set by Government at the end of the year has not been achieved by all companies.
Capacity utilisation in industry is currently mixed with a few companies operating above the set target while the majority are below the 60 percent threshold.
To date capacity utilisation in different sub-sectors of the manufacturing sector has increased from below 10 percent in 2008 to between 30 and 50 percent and in some few cases above 50 percent.
In his 2010 Budget speech Finance Minister Tendai Biti admitted as much after giving indications for October.
According to the October report only two industries had breached the 60 percent thresholds set by Government.
These include the drinks and tobacco industries that achieved capacity utilisation levels of 80 percent while the textile and ginning industry was at 60 percent.
The chemicals and petroleum and non-metallic minerals sectors were sitting at 50 percent followed by the clothing and footwear sector at just around 45 percent.
The foodstuff and paper printing sectors anchored the list with a capacity utilisation of around 35 percent.
Earlier the 2009 Confederation of Zimbabwe Manufacturing survey, that was released in November and derived from a sample of 100 companies countrywide, showed that there has been an improvement in capacity utilisation recording marked strides in reviving the sector to levels about 32,3 percent for the first half of 2009.
According to the survey overall output volume grew by 110 percent over the period under review.
This, according to the survey was largely due to the introduction of a multi-currency system, which allowed companies to plan and budget.
Despite the failure to achieve the 60 percent target by most companies, it is hoped that more companies will be able to raise their capacity utilisation in 2010 as the manufacturing sector is projected to record a further 10 percent growth rate.
In the current season the manufacturing sector, which recorded a cumulative decline of -91.1 percent between 2000 and 2008, was estimated to have registered a positive growth of 8 percent in 2009.
The successful turnaround was a result of the implementation of market friendly and stabilisation policies provided for under STERP.
These policies include the adoption of stable multiple currencies, liberalisation of the current account and the removal of price controls and distortions, as well as surrender requirements on exporters’ foreign exchange earnings.
Furthermore, the increase in bank deposits from US$475 million by April to US$1 billion in October 2009, allowed banks to begin lending, also targeting the manufacturing sector, whose share of loans and advances constituted about 22,3 percent of total loans by October 31 2009.
Additional external lines of credit amounting to US$753 million, of which US$72 million was for the manufacturing sector complemented the lending.
