Firms set year-end capacity utilisation target

Firms set year-end capacity utilisation target
Published: 20 April 2018
BULAWAYO industries have set a target of 60 percent capacity utilisation by the end of this year and require $200 000 in foreign currency weekly to fully fund their operations.

Confederation of Zimbabwe Industries (CZI) Matabeleland chamber president, Mr Joseph Gunda, local firms were working on upgrading their systems and needed more capital to acquire modern technology and new equipment to improve the quality of their products so as to meet the set target.

He said foreign currency shortages were a major stumbling block to robust performance in the first quarter, despite positive gains achieved last year.

Without adequate foreign exchange supply, he said, stagnation could hamper gains achieved so far.

"We have an ambitious target of improving average capacity utilisation of Bulawayo companies to 60 percent by the fourth quarter of 2018 given Government support through the thrust towards business turnaround," said Mr Gunda who is also General Manager of General Beltings.

"Performance of Bulawayo companies in the first quarter of 2018 has been subdued due to forex shortages when compared to the last quarter of 2017.

Average capacity utilisation is ranging from 40 percent to 50 percent. Bulawayo companies need at least a minimum of $200 million weekly in order to import the necessary raw materials and spares for optimum productivity."

Earlier, industries had pinned their hopes on tobacco auctions and repatriation of externalised funds for a foreign currency relief. Mr Gunda said the momentum, which was witnessed in the previous quarter, failed to extend into the first quarter of 2018 as companies ran out of raw materials.

"The positive trajectory we witnessed in capacity utilisation increase in the fourth quarter of 2017, which generally ranged from 50 percent and above for Bulawayo companies, could not be sustained into 2018," he said.

"With the opening up of the tobacco auction floors coupled with inflows from externalised funds, we anticipate an improvement in forex allocations for industry to import more raw materials and make products more available on the market."

In his speech to mark Zimbabwe's 38th independence celebrations on Wednesday, President Mnangagwa alluded to the cash shortages and challenges facing the industry and depositors. The President said Government was working flat out to improve liquidity by revitalising the productive sectors to boost exports as well as attracting fresh foreign direct investment and credit lines.

Mr Gunda called for a collective effort to reduce cost of production, calling for a downward review of electricity, water and transport charges for Zimbabwean products to be competitive regionally. He attributed some of industry's woes to porous borders where foreign manufactured products still find their way into the country prejudicing local companies and delays by Zimra to clear raw materials.

Mr Gunda also implored Government to consider industry's request for a special fund for retooling and technology upgrades to assist industries to improve the quality of their products.

"Collectively we need to reduce the unit cost of production in order to be competitive and generate more forex through exports. There is a need to create an enabling environment where cost of power, water, labour, transport, interest rates etc must go down to enable Zimbabwean products to be competitive on the regional and international front," he said.

- chronicle
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