Capacity utilisation in Zimbabwe’s manufacturing sector has gone down by 2.9 to 53.2 percent in 2023 from 56.1 percent the previous year.

According to a report just released by the Confederation of Zimbabwe Industries (CZI), this development is attributed to foreign currency shortages, crippling power crisis, exchange rate volatility and currency crisis, on top of other factors.

Presenting the 2023 CZI Manufacturing Sector Survey on Friday in the capital Harare, CZI chief economist, Cornelius Dube, said (via Business Times):

“Capacity utilisation, which measures roughly how productive a factory is, is down to 53.2% in 2023 from 56.1% in 2022 and 56.3% in 2021.”

Dube further disclosed that the manufacturing sector’s contribution to Gross Domestic Product fell to 9% in 2023 from 14.8% in 2018.

“In 2018, the manufacturing sector’s contribution to GDP was 14.8%. It has since fallen to just 9% in 2023.

“This is about half of what manufacturing was contributing to GDP in the 1980s and 1990s. Between 1980 and 1989, manufacturing contributed 23% to GDP on average,” he said.

Zimbabwe’s manufacturing industry includes sectors such as food processing, textiles, and metal production among others.

According to the CZI survey, 47% of manufacturers thought that the economy would improve between 2023 and 2024, while 30% thought that it would deteriorate.

Capacity utilization refers to the extent to which a company’s resources are being used to generate output.

This includes equipment, material, labor force, facilities, and other resources at hand.

Factors affecting capacity utilisation, the availability of resources such as raw materials, labor, machinery, and technology directly impacts short-run capacity utilization.

Limited availability or disruptions in any of these resources can hinder production capabilities and limit output levels.