Bulawayo. — More than 20 top companies in Bulawayo have recorded positive growth this year evidenced by increasing capacity utilisation, fresh investment and opening of new plants.
According to the Confederation of Zimbabwe Industries (CZI), investors have shown renewed interest in Bulawayo with the manufacturing sector on a gradual rebound despite numerous challenges facing the economy.
“Several companies have of late shown renewed interest in the city and existing firms are increasing their capacity utilisation and establishing new branches whilst those that had closed shop are re-opening with others opening new plants,” said CZI Matabeleland Chapter president, Joseph Gunda.
“Various surveys conducted by the Industry and Commerce Ministry and CZI, point to the second largest city slowly crawling back towards revival, with some key sectors making positive strides in servicing both the local and export markets.”
CZI has since noted many companies that have shown growth potential in the city. Among these is Monarch Steel, a division of Treger Group of Companies, which has recorded 167 percent increase in export volumes since last year.
Agro-processing giant, United Refineries Limited is now diversifying its product portfolio to offer the full traditional soap brands-geisha and has recently ventured into salad cream making. Blue Ribbon Foods reopened its operations at the beginning of the year and has created employment opportunities in the city.
Pharmaceutical giant, Datlabs Limited has also increased its capacity utilisation to over 78 percent while Merprin Founders has also grown its output and is expanding export market base.
Arenel Biscuits has also increased its investment and diversified into manufacturing beverages and snacks. A few months ago leading confectionary firm, Bakers Inn, commissioned a new plant in Bulawayo after investing $5 million, thereby increasing capacity and domestic supply. Similarly, Proton Bakery also opened shop in Bulawayo and is aggressively penetrating the regional market and offering good competition to Lobels and Bakers Inn, said Gunda.
Shepco Group-has recently acquired Shepco BMA Fasteners, which is now operational and extending its operations regionally.
Meanwhile, General Beltings’ half year results show that turnover has increased by 47 percent with capacity utilisation also rising from 20 percent to 41 percent.
Gunda is general manager at General Beltings. Motovac, the Botswana-based company has opened distribution network in Bulawayo while Choppies Supermarket has been on an aggressive drive spreading her wings with 32 branches countrywide and 2000 plus workforce. Regional cement maker, PPC Zimbabwe has also expanded and extended its tentacles into Mashonaland where it has set up an $87 million plant in Msasa. As a result the company’s capacity has doubled from 700 000 tonnes of cement to 1.4 million tonnes annually following the commissioning of the Harare plant.
FAW, one of the world’s leading Chinese headquartered automotive manufacturing companies has highlighted that it will soon set up an automobile assembly plant in Bulawayo, a development CZI says will boost efforts underway to revive the city’s industrial sector. The company, which has operations in South Africa had agreed in principle with the Bulawayo City Council to set up a vehicle assembling plant in the city.
“The company recently opened a showroom and offices in Bulawayo in addition to the one it has been operating in Harare over the last five years,” said Mr Gunda.
He said several other companies in the engineering sector that have shown positive signs of turnaround include, Bottom Armature Engineering, Zim Hosiery, Ceratrex, Nimir & Chapman, Grills Abattoirs, Ref Air, Pump & Steel and many others. While the CZI manufacturing sector survey showed capacity utilisation rising from 34,3 percent in 2015 to 47,4 percent in 2016, year 2017 recorded a 2,3 percent drop to 45,1 percent.
Industrialists, however, said the drop was though negative, reflected increased capacity due to retooling programmes as firms expanded operations and increased volumes.
Most companies have benefited from removal of certain goods from the Open General Licence (OGIL) through introduction of restrictive measures on imports by Government.
Major supporting legislation included Statutory Instruments (SI) 138, 126 and 64. SI 138 was introduced soon after dollarisation and covered such products as cooking oil and soap. SI 126 was introduced on 18 August 2014 covering products such as cement, milk, conveyor belts and rubber related products. SI 64 of 2016 was the latest and widely referred instrument covering a wide range of products. Other successful economies such as China, India, turkey, Ethiopia and South Africa have employed the strategy to revive, boost and protect their industries.
Prospects are high that the adoption of the Special Economic Zone (SEZ) model, to which Bulawayo has been designated, would add impetus to increased investment in the city. Government has already gazetted the SEZ Act and appointed a board led by Dr Gideon Gono to spearhead this initiative.
Gunda, however, said the manufacturing sector continues to face a myriad of challenges chief among them being shortage of foreign currency to import key raw materials and machinery spares, high costs of production, inadequate capital for retooling to replace antiquated machinery, unavailability of affordable lines of credit, competition from imported goods mainly due to the use of a stronger US$ currency and high interests rates on loans.