Local industry has failed to achieve the 60 per cent half year production targets due to financial constraints, resulting in the extension of the projected output rates to the end of this year.
Zimbabwe Chamber of Commerce (ZNCC) Economist, Kipson Gundani, said there was a need to come up with consistent policies that would ensure an increase in production levels within most companies in the country.
“We have to come up with business friendly policies, which will save our manufacturing sector from collapse. Production levels are still low and companies are still operating below 50 per cent, partly because of some incoherent policies,” said Gundani.
The ZNCC economist said companies should concentrate on raising working capital, which would ensure stable liquidity levels.
“This can only be achieved when the financial sector opens up lines of credit. If adequate corporate loans are available there is no reason why production in the manufacturing sector cannot improve. Working capital represents the presence of operating liquidity and once the liquidity levels are ok, the chances for the industry to perform well are high.”
Meanwhile, the government has expressed its commitment to engage the financial sector to fund productive sectors.
“As government we are trying to encourage the banking sector to make credit lines available for the industry. We are also aware that the ministry of industry has a revival facility, which we encourage companies to utilise,” Economic Planning and Investment promotion deputy minister, Dr Samuel Undenge, said.
Business Council of Zimbabwe Secretary, John Mufukare, told ZBC recently that most firms failed to increase production in the first six months of this year due to difficulties in accessing funds as official data shows that average capacity utilisation for the period under review was between 35 and 42 per cent.
Post published in: Business Analysis