Forex shortages frustrate industry revival

Forex shortages frustrate industry revival
Published: 14 June 2018
THE Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter says foreign currency shortages facing the country continue to derail efforts to resuscitate industries in Bulawayo.

Once the industrial hub of the country, Bulawayo has suffered massive de-industrialisation due to the harsh macro-economic environment in recent years.

Speaking on the status of Bulawayo industries during a Special Economic Zones breakfast meeting held in the city yesterday, CZI Matabeleland Chapter president Mr Joseph Gunda said the prevailing foreign currency shortages were the major stumbling block curtailing industrial recovery.

"In 2018, we have seen the challenges continue with us particularly on forex. The shortage of foreign currency to import key raw materials and machinery spares is the single biggest threat to business revival in Bulawayo and the country at large.

"We are all aware that we have been expecting that the opening of the tobacco auction floors this year would help improve foreign currency allocations for manufacturing industry but it hasn't reached the levels we've been expecting," he said.

The 2018 tobacco marketing season opened on March 21. Latest statistics from the Tobacco Industry and Marketing Board show that 36,9 million kilogrammes of the golden leaf worth $153,6 million have been exported to different parts of the world since the beginning of the year.

Mr Gunda said they have been advocating through the Reserve Bank of Zimbabwe for the manufacturing sector to have preferential allocation of forex to facilitate the importation of key raw materials.

"The second item we are facing is the high cost of production and we have highlighted this in various fora and representation that Zimbabwe has the highest cost of production brought about by the cost of utilities particularly our electricity. Labour costs are very high and we continue to use obsolete machinery, which does not bring the efficiency that we require making us uncompetitive," he said.

As a result of the operational constraints that continue to haunt industries, Mr Gunda said at the moment they have seen capacity utilisation in the manufacturing sector going down in 2017 by two percentage points from 47,5 percent to 45 percent.

In the past, Mr Gunda said in light of the above challenges, city industries have suffered, thereby putting industrialists in a corner to device strategies aimed at reviving companies in the city.

He said such initiatives included coming up with the Distressed Industries and Marginalised Areas Fund.

"This (Dimaf) had little impact as the funding was inadequate resulting in low success due to implementation challenges. The fund did not cover the full spectrum of the value chain as some non-productive entities ended up as beneficiaries at the expense of the manufacturing sector," said Mr Gunda.

He noted that following the support that industry has received from the Government through the promulgation of Statutory Instruments such as SI 64 of 2016, there had been remarkable improvement in industrial performance in 2017.

"We saw 2017 beginning to show positive results. We also volumes going up in 2017 and a lot of our members who report to us in our monthly meetings achieved great strides in terms of their productive and volumes generation, but at the moment industrial revival in Bulawayo is hamstrung by forex challenges," said Mr Gunda.
- newsday
Tags: Forex,


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