Published: 04 April 2014

The country's manufacturing sector is still depressed as companies continue to face challenges in producing for both local and foreign markets.

A survey carried out by ZimTrade on the capacity of the local export manufacturing sector revealed that very few companies are exporting their products.

According to the study, capacity utilisation for the sector stood at 37,5 percent. Only 40 percent of companies included in the study are currently exporting their produce. However, the companies that are only exporting 40 percent of total production levels, 10 percent lower than the Government threshold of 50 percent export or more to access a 5 percent corporate tax relief. The resource-based subsectors had more exporting firms than the non-resource-based ones.

About 52 percent of participants said they indicated that they face competition from foreign firms with South Africa and China being the major competitors.

South Africa remains the country's largest trading partner as it was ranked the biggest competitor for the country's manufacturing industry as well as the leading export destination for the country's products.

The sampling frame of the study was representative of key manufacturing subsectors such as food and beverages, tobacco, clothing, textiles, leather and footwear, engineering as well as iron and steel. Zimtrade said this posed a serious economic risk for the country.

"Should anything happen to the South African market, Zimbabwe is left in a precarious position. There is need to diversify our export markets to mitigate this trade risk," ZimTrade said.

Most companies in the sector have not been certified for quality by the Standards Association of Zimbabwe. The study showed that only 42 percent of products were certified. Chemicals and engineering firms had the most certified products while clothing and textiles had the least.

The low level of certification was attributed to high fees charged by SAZ which most companies said they could not afford. The study also revealed that most companies are operating without export marketing skills. Approximately 38,6 percent of firms are operating without an exporting department although 46 percent of their staff was trained on export marketing skills.

Major export constraints highlighted in the study include access to capital, duty on imported raw materials, ageing equipment, high interest rates and electricity charges.

The survey revealed that there is significant export potential if the business operating environment is improve.

ZimTrade recommended that Government should review the 50 percent threshold for accessing corporate tax relief as it may not be achievable in the short term.

The study also recommended the establishment of a retooling fund spearheaded by the Confederation of Zimbabwe Industries as well as the enhancement of the role of trade facilitation institutions.
- bh24