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Import dependence piling pressure on forex demand - Chronicle

Import dependence piling pressure on forex demand

Zambezi Tanners general manager Mr Arnold Britten

The Chronicle

Sikhulekelani Moyo, Business Reporter ZIMBABWE needs to scale up domestic value chain development strategies with focus on substituting imports in order to save foreign currency.

The country’s food manufacturing sector alone, for instance, imports more than 70 percent of its raw materials making it one of the heaviest consumers of scarce foreign currency according to the Confederation of Zimbabwe Industries (CZI),

The manufacturing sector capacity utilisation is set to close the year at 61 percent, up from 47 percent in 2020 and 36,4 percent in 2019.

The major challenge however, is that most of the manufacturing companies are importing raw materials which need forex.

Estimates indicate that locally manufactured products now occupy 65 percent of the domestic retail supermarket shelf space but the target is to increase this market share.

Bulawayo industries are also on a recovery path with several companies registering increased utilisation.

During a recent tour of some the city’s firms, industry leaders said they were happy with the level of capacity utilisation but their major concern was inadequate forex to import raw materials.

Zambezi Tanners manager, Mr Arnold Britten, applauded the Government for establishing the forex auction system but said his business was not getting enough forex.

“We import chemicals for leather processing and this needs forex,” he said.

The forex auction platform allocates between US$35 million and US$41 million per week to small and big businesses.

Zimbabwe Grain Bag managing director, Mr Cavin Nkiwane, also said shortage of foreign currency for raw material the major challenge they were facing.

During the CZI congress in November, chief economist, Mr Cornelius Dube, stated that reliance on imports was affecting the country’s balance of trade given the huge resultant import bill emanating from the importation of some finished goods and raw materials.

Notably though, in terms of volume of foreign inputs, the manufacturing sector comes second after the electronics and chemicals industry, where 90 percent of the raw materials are imported.

“There is a lot of dependency on foreign markets for manufacturing, which has led industry to continuously talk about foreign currency availability,” he said.

“While we say this economy is agro-based it is also surprising that the manufacturing of food in Zimbabwe would require almost 70 percent of raw materials that are coming from the foreign markets.

“Manufacturing industries of electric motors, transport equipment and chemicals use 90 percent of raw materials from foreign sources.”- @SikhulekelaniM1.