A RECENT report by the Confederation of Zimbabwe Industries (CZI) shows that the manufacturing sector’s contribution to the economy has been on a systematic decline since 1980, plunging to 9% in 2023 from a high of 23% as the sector battles headwinds characterised by currency volatilities and the devastating effects of the unfolding drought.
At independence, Zimbabwe’s then robust manufacturing sector contributed 23% to Gross Domestic Product (GDP) between 1980 and 1989 but has since been in decline.
During that near decade of growth, the productive sector contributed US$10 billion to GDP.
In the report, CZI highlighted that Zimbabwe’s manufacturing sector was on a downward spiral in a region where other countries were experiencing growth due to the steep cost of doing business and an over-dependence on imported raw materials, among other factors.
The report shows that in 2022 the southern African country had the least-performing manufacturing sector on the continent due to low export competitiveness, among other reasons.
“The manufacturing (sector’s) contribution to GDP has fallen from 23% in the 1980-1989 period to 9% in 2023,” the report reads.
“How do we begin the journey back to 25% or US$10 billion?”
Notably, the report titled: ‘Why we should accelerate manufacturing competitiveness to reverse the structural shift that is showing a decline in manufacturing contribution to GDP in Zimbabwe,’ also points out that Zimbabwe’s exports are not competitive on the global market, a factor militating against the fragile manufacturing sector.
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“Low export competitiveness and dominance of primary products in competitive advantage is a concern.
“High raw material import dependence means compliance associated with imports (is) unavoidable. (Zimbabwe is also subjected to) an unfair level playing field. (The) cost of compliance makes the manufacturing sector uncompetitive,” the report further observes.
Drawing comparisons on how the manufacturing base is performing on the continent, the report shows that Zimbabwean products had a comparative advantage of 23% while Kenya stood at 62%.
Products from neighbouring Zambia, according to the paper, have a comparative advantage of 30%, Ghana (28%), and Morocco 54%.
CZI’s paper observes that development trends globally show that some countries have transitioned to upper-middle-income status, leveraging on the manufacturing sector.
The report further reads: “Examples can be found where countries used manufacturing to transition to upper middle-income status. These countries include Malaysia, Mauritius, and Hong Kong.
“Ethiopia is a growing manufacturing powerhouse on the continent. Services emerged to service manufacturing.”
The report also proposed that Zimbabwe can draw immense trade opportunities by tapping into the African Continental Free Trade Area (AfCFTA).
AfCFTA, established in 2018 under the African Continental Free Trade Agreement is a free trade area straddling across most African countries. Zimbabwe is a party to the agreement.
Outside Côte d'Ivoire, the CZI report indicates that the southern African country was “potentially the second-best beneficiary,” from the vast trade area.
The report proposes vigorously tapping into the trade zone, among a range of reforms the southern African country can roll out to set its shrinking manufacturing sector on a growth trajectory.
“Have we invested enough time and resources in exploring and mapping out how we will take advantage of AfCFTA from a manufacturing point of view? How can we accelerate competitiveness?
“(There is need to) improve competitiveness and ease of doing business for manufacturing,” the report states.
