Zimbabwe’s manufacturing sector requires around $2 billion in capital funding for optimum operation, the Confederation of Zimbabwe Industries (CZI) has said.
CZI president Sifelani Jabangwe pinpointed the pharmaceutical sector and agro-industry as the key sub-sectors most in need of urgent funding.
“In total, to kick-off all the sub-sectors we would round off to a figure of about $2 billion. But to touch on the low hanging fruits that need urgent support we are looking at the pharmaceuticals sector . . . we are also looking at some of those areas with high imports.
“We would also consider the construction materials sector. Right now we are importing a significant amount of materials that the local companies used to manufacture. We are also looking at consumer electronics, but the key sector is the agro-industry since Zimbabwe is largely an agriculture-based economy,” he said.
He was speaking at an African Development Bank (AfDB) round table engagement with the country’s private sector.
The local manufacturing sector hit its peak in the 1990s, contributing around 16 percent to the country’s gross domestic product (GDP).
It played a key role in the economy, supplying about 50 percent of its output into the agricultural sector while 63 percent of its inputs were from the agriculture sector.
At the beginning of the year 2009 the sector was operating at an estimated capacity utilisation level of less than 10 percent, but this has since increased to 45,1 percent, as of last year.
Mr Jabangwe said although Government had contributed to creating a conducive environment for the sector, the lack of affordable long-term funding remained a serious concern.
“Over the 15 or so years that we underwent hyper-inflation, most companies failed to recapitalise and they did not modernise equipment. Government has put in place a number of supportive measures, and financing the sector’s major constraint.”
AfDB’s country manager Damoni Kitabire said the bank was aware of Zimbabwe’s private sector funding requirements, but urged for a collaborative effort.
Despite a general decline in foreign funding for the local private sector, the AfDB has continued to finance “bankable projects” from the country’s private sector.
The regional financier has extended loans and facilities to Zimbabwe to the tune of around $230 million to date.
“The bank is alive to the challenges which Zimbabwe’s private sector is facing . . . the road ahead for the private sector is promising, but it will require a lot of deliberate and strategic effort from the financial sector, the manufacturing industry, the agriculture sector, the mining sector, the telecommunications sector and all small and medium enterprises (SMEs) to bring that promise to fruition.
“The AfDB stands ready to collaborate with you to bring viable projects that will have positive spillover effects on the economy of Zimbabwe,” he said.
Experts say private sector development (PSD) is widely recognised as an engine of sustainable and inclusive growth.
And the regional financier already identifies PSD as one of its fundamental areas of focus to reduce poverty and support sustainable growth in Africa.
Mr Kitabire said more reforms were required for the country to attract increased foreign direct investment.
“Our hope as a development bank, is that discussions such as these will better inform and uniquely align the strategic methodology for the bank’s engagements with the private sector in Zimbabwe.
“It is now imperative for Zimbabwe to implement the much-needed reforms to grow the economy and to be competitive in what appears to be a more complex, demanding and digitised future,” said Mr Kitabire.