SA competition hits local firms

HARARE - Zimbabwean firms are facing stiffer competition from their South African counterparts as opposed to Chinese companies, the latest Confederation of Zimbabwe Industries’ (CZI) survey report has shown.

The report noted that while most players in the manufacturing sector face competition from many countries, South Africa remains the largest competitor of Zimbabwean industries.

“85 percent of the respondents indicated that they face competition from South Africa.

“This figure remains unchanged from last year’s. 67 percent face competition from Chinese products, while other countries pose competition to 20 percent of the respondents,” read part of the report.

This is in sharp contrast to general market sentiments that the influx of cheap imported goods that have flooded the country are of Chinese origin.

The report also indicated that other countries consist of a basket of more than 10 diverse countries.

This comes as the country’s manufacturing sector remains in a crisis, with capacity utilisation plummeting to 39 percent from 44,2 percent in the year to September 2013.

According to CZI’s 2013 manufacturing sector report, the country’s industry continues to be depressed despite improvements in the macro-economic conditions.

The decline in industry performance comes at a time when the economy — which showed signs of improvement during the four-year coalition government, growing an average of seven percent between 2009 and 2012 — is deteriorating, with this year’s targeted gross domestic product growth already revised downwards from five percent to 3,4 percent.

Already, Zimbabwe remains a net importer as its trade deficit ballooned to $3,02 billion in the eight months to August 2013 after the country imported goods worth $5 137 billion against $2,11 billion exports during the period.

According to latest figures from the national statistics agency, Zimstats, the southern African country imported nearly $35 million worth of milk and related products as dairy processors continue to lobby government to introduce surtax on milk in order to compete on a level playing field with South African products.

The widening trade deficit comes as the African Development Bank (AfDB) recently warned Zimbabwe to limit imports to manage the gap.

AfDB said the reduction would result in more foreign currency retention and provide local industry with an opportunity to recuperate.

“Given that total imports already constitute about 52 percent of their projected value in 2013, there is need to contain them as the year progresses to ensure that the targeted value is achieved,” noted the bank in its latest monthly report.

Zimbabwe has been experiencing a recurrent trade deficit as it has, over the years, continued to import far more than it exports.

Total imports during the first half of 2013 were about $3,9 billion, an increase of about 26,2 percent compared to the same period in 2012.

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