Industrial output stagnant

HARARE - Zimbabwe's industrial growth has remained stagnant at 35 per cent over the past six months, with unemployment and once record-breaking inflation spiralling out of control again, the minister for Industry and Commerce has warned.

Zimbabwe’s economy had registered massive growth in the first year after the formation of an inclusive government after an effective dollarisation of the economy helped spur foreign investment and prompted the large Zimbabwean exile community to send more remittances home. Now those gains are being reversed, with industrial output remaining stagnant.

“Capacity utilisation is torpid at 35 per cent since December and we are being threatened by regression,” Ncube told the Parliamentary Portfolio Committee on Industry and Commerce. “The reason why it has remained stagnant is because there are no lines of credit at affordable rates in the long term. Our industry cannot take short-term credit because the debt would become due before they have raised enough turnovers.

“The ministry also thinks there is failure of appreciation in Treasury of what role industry can play. If we prioritise the productive sector, we generate more money to get the wheels of the economy turning. We appreciate that there are other pressing needs, but my view is that everything else should come second. After all, if industry is given money, you are guaranteed of getting the money back,” he said.

Prior to formation of the inclusive government, employment was pegged at 6 per cent but rose to 15 per cent and stayed there. Industrial capacity utilisation which was pegged at 10 per cent rose to 35 per cent, before staying there, Ncube said. And significantly, over the same period, since the new unity government under Prime Minister Morgan Tsvangirai took office in mid-February last year, inflation has fallen rapidly from its once astronomical 500 billion per cent in December 2008 according to IMF data, while growth had begun to pick up. But inflation is rising dangerously again.

The latest figures for April showed Zimbabwe’s annual inflation leaping to 4.8 per cent in the year to April, after quickening from 3.5 per cent in March.

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