Introduction
The manufacturing industry is currently grappling with challenges such as escalating operational costs, power supply disruptions, high import dependency, and depleted equipment. Overcoming these challenges is essential for the sector to reach its full potential. To ensure long-term sustainability, there is need for manufacturing companies to adopt innovative strategies aimed at streamlining production. This article outlines some of the key strategies that manufacturing companies in Zimbabwe can implement to foster sustainable growth.
State of the Manufacturing industry in Zimbabwe
In 2023, the sector’s output was valued at US$3.7 billion, indicating a 37.7% decline from US$5.9 billion in 2022. Furthermore, the sector contributed approximately 9% to the country’s GDP in 2023, significantly underperforming relative to its potential, as evidenced by its average contribution of approximately 23% between 1980 and 1989.
Table 1: Notable Industry Statistics
| Variable | 2019 | 2020 | 2021 | 2022 | 2023 | Average |
| GDP (US$ Billions) | 3.1 | 3.4 | 3.5 | 5.9 | 3.7 | 3.9 |
| Capacity Utilisation (%) | 36.4 | 47 | 56.3 | 56.1 | 53.2 | 49.8 |
| Loans to the Industry (US$ Millions) | 0.9 | 0.9 | 1.8 | 2.2 | 2.8 | 1.72 |
Table 2: Industry Import Statistics
| Company Size | Import Percentage (%) |
| Small | 43 |
| Medium | 53 |
| Large | 60 |
| Average | 52 |
The Confederation of Zimbabwe Industries (CZI) 2023 report reveals that many manufacturing companies in Zimbabwe still rely heavily on imported raw materials, with over 50% of those used by large and medium-sized manufacturers coming from external markets. Capacity utilization in the sector remains low, averaging just 49.8% between 2019 and 2023. Intensifying these challenges is the widespread use of outdated equipment, leading to frequent breakdowns that have put many businesses under financial distress some to the point of closure.
Key Challenges Impacting the Industry
- Power Shortages
Power shortages continue to affect Zimbabwe’s manufacturing sector, driving up production costs as companies increasingly rely on alternative energy sources like generators. Many businesses, including those in manufacturing, have adopted using generators to mitigate the impact of unreliable grid power. However, this shift has significantly increased production costs due to high fuel prices.
- Supply Chain Disruptions and Import Dependency
Supply Chain disruptions is also another major factor affecting the manufacturing industry reducing production levels. A key driver of these disruptions is heavy reliance on imported raw materials. This dependency exposes companies to risks such as currency volatility, longer lead times, and logistical challenges, which disrupt the flow of materials into production facilities.
- Use of Aged Equipment
A substantial number of manufacturing companies are operating with aging equipment, contributing to lower capacity utilization. Outdated machinery not only slows production rates but also increases the frequency of breakdowns, disrupting operations. A case in point is Khaya Cement, a leading cement manufacturing company currently undergoing corporate restructuring, announced that unexpected equipment breakdowns have significantly impacted their production capacity, resulting in substantial production losses.
- Low Export Capacity
The industry has showed low capacity for exporting, with exports accounting for an average of only 7% of total output. This limited export activity is evident across all subsectors, where exports consistently represent less than 20% of production. The underperformance in export markets reveals a critical gap in the sector’s global competitiveness, emphasizing the need for targeted strategies to enhance export capacity.
Key Strategies for Improving Zimbabwe’s Manufacturing Business
Below are practical approaches that manufacturing companies can adopt to drive improvement:
- Investing in Renewable Energy and Energy Efficiency
It is increasingly cost-effective for manufacturing companies to transition to renewable energy sources, such as solar. This transition can significantly reduce power disruptions, ensuring a smooth and more efficient production processes. While the initial investment in solar energy infrastructure may be costly, the long-term benefits far outweigh the costs. For instance, gensets have an average cost of 40 to 60 cents per KWh, while ZESA charges approximately 16 cents per KWh. In comparison, solar energy can be produced at a significantly lower cost of around 5 cents per KWh, presenting a more economical and sustainable long-term solution.
- Localizing Supply Chains
Manufacturing companies can benefit from focusing on sourcing raw materials locally to create more sustainable and cost-effective supply chains. By partnering with local small-scale suppliers, manufactures can minimise their reliance on external markets, ensuring a more stable and reliable supply of materials. In addition, exploring backward integration can further strengthen supply chains by securing a consistent flow of raw materials. These local partnerships can lead to improved production efficiency and help reduce overall operational costs, making it a practical and beneficial strategy for long-term success.
- Regular Maintenance and Timely Upgrades of Machinery
To optimize returns on investments in plant and equipment, manufacturing firms must prioritize improving capacity utilization. Regular maintenance, coupled with timely upgrades, is essential to minimizing downtime and maintaining seamless operations. Manufacturing companies should replace machinery every 5–10 years in light industries, 10–15 years in medium industries, and 15–20 years in heavy industries, while leveraging predictive maintenance to maximize efficiency and minimize downtime.
- Promoting Innovation and R&D
Manufacturing Companies can Invest in research and development (R&D) as it is important to driving innovation in product design, production processes, and overall competitiveness within the manufacturing sector. Companies should allocate an average of 5% of their revenue to research and development (R&D) to drive technological innovation, enhance product quality, and improve operational efficiency in response to evolving market demands. Collaborations with universities and research institutions are especially valuable, fostering the development of locally relevant solutions to address the unique challenges of Zimbabwe’s manufacturing industry.
By implementing these strategies, the manufacturing sector can be revitalized, restoring its peak performance last experienced during the 1980–1989 period.
By Tafadzwa Muswe
tafadzwa.muswe@crowe.co.zw