Mishma Chakanyuka, Staff Writer 
THE Confederation of Zimbabwe Industries (CZI) says the country’s low manufacturing capacity utilisation base means it stands to benefit more from the Africa Free Continental Trade Area (AfCTA) than other nations on the continent.
AfCFTA, the world’s largest free-trade area, began trading on January 1, 2021, creating a market of 1,2 billion people and the world’s eighth economic bloc with a combined gross domestic output of US$3 trillion, which is predicted to more than double by 2050.
According to the Zimbabwe Statistics Agency (ZimStats), the manufacturing sector’s capacity utilisation went down by 3,2 percent in the first quarter of 2023 to 45,6 percent from 48,8 percent recorded in the fourth quarter on the back of incessant power cuts, among other factors.
CZI’s chief economist, Cornelius Dube
“I think the fact that capacity utilisation is very low in Zimbabwe is an opportunity rather than a threat.
“This is because lower capacity utilisation is a result of two issues: a decline in output, or it simply reflects that the capacity itself has expanded.
“In Zimbabwe, it is the latter,” CZI’s chief economist, Cornelius Dube, said during The Financial Gazette’s executive dialogue this Wednesday.
“In 2021 and 2022, the manufacturing sector has been registering a growth in output, but capacity utilisation has not been increasing too much simply because the firms were also increasing their capacities. If you expand your capacity and output does not increase in the same ratio, capacity utilisation will fall.”
Dube highlighted that low capacity utilisation means that there is potential to be exploited because assets are not sweating.
“We can produce more, but demand is the limiting sector. If we are now expanding into the African Continental Free Trade Area, that means we are now producing for more than just the local market.
“If we look at the statistics, manufacturing sector exports are very low; in 2021 and 2022, they will be only three percent of total exports.
“We have a lot of underutilised capacity in the industries and this is where we can utilise it,” he said.
“A player in the cooking oil industry was telling us that their capacity can supply the whole country, but there are so many firms there. This is an opportunity for them to expand into the AfCTA.”
The agreement establishing the AfCFTA was signed in Rwanda in 2018 to create a single continental market for goods and services and a continental movement for business people and investments.
The AfCFTA agreement has brought together 54 African countries and moulded a single market of 1,4 billion people.
Experts estimate that when AfCFTA is optimised, Africa’s GDP will grow at an estimated rate of six percent to about US$66,4 trillion in the next 50 years.
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