INDUSTRY and Commerce minister Nqobizitha Ndlovu says the headwinds stifling the competitiveness of the manufacturing sector must be addressed amid revelations that more than half of the firms are not expecting a better performance this year.
According to the Confederation of Zimbabwe Industries (CZI) 2024 Annual Manufacturing Sector Survey Results, there are an estimated 4 552 manufacturing firms with at least 10 employees in Zimbabwe.
The output by manufacturing firms decreased by 0,5% in 2024 as capacity utilisation fell by 0,9 percentage points to 52,3% last year compared to the prior year.
The major reasons for the drop were the high cost of production, followed by obsolete technology, lack of funding/government support, high taxes (compliance costs), electricity issues, currency issues, export retention and competition from the informal sector.
“I am enthused by the fact that there is a sense of cautious optimism, with 44% of manufacturing firms expecting better performance in 2025. The pharmaceutical, beverages and furniture sub sectors show particular promise, with over 50% of firms in these areas anticipating growth,” Ndlovu said at the launch of the survey on Monday.
“However, we must address ongoing challenges that hinder our competitiveness. High production costs, currency issues and outdated technology continue to pose significant barriers. Notably, only 29% of manufacturers believe they are prepared to compete in the African Continental Free Trade Area, highlighting the need for strategic investments and support.”
He said 83% of the foreign currency obtained by the manufacturing sector in 2024 came from domestic sales, reflecting the importance of local markets.
“However, only 5% of output was directed toward exports, indicating a need for a stronger focus on international markets,” Ndlovu said.
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“As we move forward, we must prioritise key policy interventions aimed at enhancing our manufacturing sector. Addressing high compliance costs, improving access to financing for retooling and stabilising the macroeconomic environment are critical steps toward fostering a more resilient industrial landscape.”
The government is currently implementing the Zimbabwe Industrial Reconstruction and Growth Plan, which was launched in October 2024 and will run until December of this year.
This transitional plan includes key interventions across manufacturing sectors aimed at revitalising production capabilities, enhancing efficiency and improving capacity utilisation.
“We intend to encourage firms to explore export markets, reducing dependence on local demand and better utilising their production capacity,” Ndlovu said.
The push for manufacturers to increase exports comes as manufactured exports totalled US$324,8 million in 2021, US$366,5 million in 2022, US$448,7 million in 2023 and US$432 million in 2024.
“This trajectory underscores our resilience and adaptability in a dynamic global market,” Ndlovu said.
He said recent entrants in the industry—those operating for up to five years—registered a significant output increase of 14%, demonstrating adaptability to current market conditions.
However, older manufacturers beyond five years are not performing well.
“Capacity utilisation across the sector averaged 52,3%, a slight decrease from 53,2% in 2023,” Ndlovu said.
“This indicates a concerning level of excess idle capacity, as many firms struggle to optimise their capacities. Large firms saw an 8% increase in output, showcasing their ability to leverage scale effectively.”
