Accessibility links

Zimbabwe's Manufacturing Sector Continues to Shrink, says Report - 2003-10-22

A leading Zimbabwean industry association says the country's manufacturing sector continues to shrink as the economy goes through its fifth year of recession.

The Confederation of Zimbabwe Industries said 249 companies shut down in 2002, adding to the 400 that went out of business in 2001.

The confederation's economist, Bernard Mufute, says the likely reason why fewer companies were found to have shut down last year than the year before is that fewer companies responded to the annual survey. In addition, he says, some companies simply closed shop without informing the relevant authorities.

According to 2001 government figures, the manufacturing sector accounted for about one third of the country's exports. The exports have been declining in volume and value over the years. Manufacturing's contribution to the Gross Domestic Product has also dropped from 25 percent in 1989 to 14 percent in 2002.

The confederation's report blames Zimbabwe's current economic crisis on several factors, including mismanagement by the government, an overvalued currency, price controls, the deterioration in the political climate following the 2000 general and 2002 presidential elections, the low levels of investment, chaotic land reform and the 2001-2002 drought.

The unemployment rate in Zimbabwe stands at more that 70 percent.

The report urges the government to take measures to bring the country's skyrocketing inflation under control, remove controls on prices and the exchange rate and slash government expenditures.

Mr. Mufute says the government, acting on his organization's recommendations, revised the fixed exchange rate, but not much more.

“I think there are political considerations, which determine whether or not the government listens to proposals coming from business organizations like ourselves,” he said. “But we continue to emphasize that the only way to address the current problems is by reducing government expenditure; we have been saying so for the past more than 10 years and we believe that people in government, at some point, will realize that there is no other way of addressing the current problems.” Whether the government will listen to the confederation's advice will become apparent on November 20 when the government unveils its 2004 budget.