The manufacturing sector is a key part of Zimbabwe’s economic development. The sector accounts for about 20% of GDP in 1996 are employed more than 17% if the workforce, but by 2007/2008 it had a sharp decline to account for only 12% of GDP. This was mainly due to the challenging economic environment that prevailed in the country since 2000.
The sector has forward and backward linkages with other economic sectors and has significant impact on economic growth and poverty reduction in Zimbabwe. Growth of the manufacturing sector creates increased demand for raw agricultural output. This has the potential to increase output and employment in the agricultural. Higher levels of productivity in agriculture provide opportunities for manufacturers of agricultural implements as well as inputs such as fertilizers and crop chemicals. Similar linkages exist to various degrees with other primary sectors such as mining.
Read On Performance of the Sector
Sectoral Challenges & Constraints
- Shortage of Working Capital and Absence Line of Credit has inhibited the growth of the competitiveness and growth of manufacturing companies leading to capacity under-utilization.
- Low levels of effective domestic demand in the economy which has persisted over the past two decades.
- Highly inadequate and erratic supply of key economic enablers namely electricity, fuel, coal, and water. The road and rail infrastructure has been severely under-capitalized contributing significantly to low productivity, high production and distribution costs and uncompetitive products and services.
- Decline in agriculture and mining sectors contributed to the negative growth in manufacturing sector has with agriculture and mining.
- Loss of Skilled Labour, there has been a marked reduction of skilled personnel in the sector as skilled people have left for better opportunities other countries.
- Influx of cheap and improperly imported or smuggled goods have reduced the market share of local manufacturers, such as textiles and clothing, in an already shrinking local market;
- Low technological capability narrowed the scope for product diversification and expansion of export base, the narrow product range and reliance on a few markets has restricted the growth of Zimbabwe’s manufactured exports;
- Low adoption of Information Communication Technologies (ICTs) – The low levels of penetration and high cost of ICT infrastructure has hindered access and usage thereby reducing the access to markets; and
- Environmental issues related to hyper-inflation and political uncertainty.
Opportunities for Growth and Investment
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Clothing and Textiles
There are immense opportunities for beneficiation of Zimbabwean grown high quality cotton fibers. The textile and clothing sectors requires investment in new technology which will enable it to be competitive especially on cotton based textiles and clothing. The sector presents opportunities for foreign direct investment or joint ventures with local investors. Zimbabwe has signed the ESA-EU Economic Partnership Agreements with the EU which allows local textile producers to export textiles using the single stage transformation rule. Zimbabwe also has access duty free to the South African market for cotton-based textiles and clothing under the SADC Free Trade Area rules of origin (double stage transformation).
The processing of cereals, vegetable, vegetable oils, meat products and dairy processing present major investment opportunities in the food sub-sector targeting both local and export markets. New technology and establishment of regional free trade areas provide opportunities to small scale producers engaged in oil processing through joint venture investments.
Opportunities for investment are available within the various sub-sectors of the food manufacturing industry.
- The processing of meat products for both local and export markets is encouraged.
Timber and Furniture
Opportunities exist for saw milling, timber, as well as board and paper production. World demand for wood products from plantation timber is expected to grow rapidly thereby providing opportunities for large scale independent investment or through partnering with existing major players.
Chemicals & Pharmaceuticals
- The chemical industry of Zimbabwe offers a varied range of products including fertilizers, pesticides, paints and varnishes, pharmaceuticals, soaps and cleansing products, perfumes and cosmetics. In recent years processing plants have been developed but there is opportunity for conversion of raw materials into processed or semi processed products for export. Opportunities exist in the manufacture of drugs (antiretrovirals, malaria control, tubaculosis drugs), and the development medical products from locally grown and natural raw materials. There is also great potential for the production of adhesives, explosives, petroleum, coal products and ethanol.
Metals and Minerals
The revival of the mining sector presents opportunities for beneficiation of nickel, chrome, platinum, gold, diamonds and iron ore.