A visit to Bulawayo presents a sorry picture

08 Dec, 2017 - 00:12 0 Views

eBusiness Weekly

Herbert Zharare
Bulawayo used to be the country’s industrial hub. Proprietors of many businesses as recent as 2000, used to flock to Bulawayo for heavy equipment, plant and equipment repairs and machining.

The major railway line linking port cities in South Africa and major markets up north of Africa, coincidentally passes through Bulawayo, making serious economic sense for the second capital to be the nerve centre for national economic growth.

However, a visit to Bulawayo today presents a sorry picture. The size of factory shells that are there bear testimony that indeed, the city used to house some of the biggest industries in the country, if not in the entire SADC region.

The situation in Bulawayo is a replica of what is obtaining in most towns and cities in the country — huge mining and industrial premises that have been abandoned over the last two decades or more.

As the country enters a new economic era headed by President Emmerson Mnangagwa, debate has been rekindled on what kind of investment is needed to retool the country’s industries and make them work again and where the money will come from?

There are some mining companies like the Zimbabwe Iron and Steel Company (Ziscosteel), whose blast furnaces have long collapsed that need billions to revive. In the manufacturing cluster, many firms have been using equipment imported from Britain over four decades ago, that has become antiquated and needs total overhaul.

However, in the wake of an impending economic boom buoyed by huge foreign market confidence that is gradually building — are some of these companies going to produce products that compete favourably locally and abroad.

That is the biggest dilemma many companies face today, whether to upgrade the old machinery they have or to dismantle it and start afresh for to be competitive.

Recently industry said Zimbabwe’s manufacturing sector required about $8 billion for working capital and equipment upgrades to arrest a downward spiral in capacity utilisation and collapse of firms due to viability challenges.

But the biggest headache any economic analyst face when unpacking this topic is of securing correct statistics to use to back his/her line of thought. Some private players argue that when the country started facing economic challenges, companies closed shop and relocated to other countries while others went under.

The correct statistics of firms that closed and those that relocated are yet to be officially made public and many have been speculating.

But as the country under the leadership of President Mnangagwa battles to mend the economy, there are some companies that should close shop for good unless the owners are prepared to adopt new business models and start afresh.

Confederation of Zimbabwe Industries president Sifelani Jabangwe, shared the same sentiments saying some companies had already reached a stage where they totally invested in new equipment in 2009 when the country introduced multiple currencies.

He said there was a need for President Mnangagwa to continue with his pro-industrial production trajectory supporting the industry, majority of which had reached 47 percent capacity utilisation since dollarisation of the economy.

“At the moment most companies are operating at 45 percent capacity utilisation and cannot compete with firms that are operating at 75 percent. Their cost per unit will be very low compared to those operating at 75 percent. Government needs to nurture these companies until they reach 55 or 65 percent capacity utilisation before opening them to competition.

“Most companies are at infancy stage after they started retooling in 2009. We expect the Government to continue addressing the other key economic fundamentals. If you increase capacity, production cost comes down and this will enable the firms to invest in additional capacity in future,” said Jabangwe.

He said it was prudent for companies to invest in latest equipment in five or 10 years, adding a number of companies had invested in automation of the industrial processes.

Economist Tapiwa Mashakada concurred that most of the companies had dilapidated machinery adding there was a need for re-engineering.

“Most of the equipment in our industries need re-engineering. There is a need for companies to invest in digital technologies and do away with the manual systems majority of them still have.

“Even if you look at the textile sector, they have gone digital — they have computerised their production system. We need to revamp everything and migrate to ICTs,” he said.

But the biggest challenge is where will the capital running into billions will come from?

Mashakada, however, suggested that the retooling of the industries could be achieved through a sustained funding of the industrial sector by Government supported by some financial institutions.

“There is a need for the Government to work together with banks such as Afreximbank to fund the retooling exercise but should be linked to the export sector,” he said.

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