Thursday, October 22, 2009

Zimbabwe factory output doubles in H1 '09 – industry

Zimbabwe factory output doubles in H1 '09 – By: Reuters
21st October 2009

Zimbabwe's factory output doubled in the first six months of 2009, partly due to policy changes by the country's unity government, including the use of multiple foreign currencies, an industry group said on Wednesday.
President Robert Mugabe and Prime Minister Morgan Tsvangirai agreed to share power in February, following last year's disputed elections and have tried to fix an economy ravaged by years of hyperinflation and political uncertainty.
A survey carried out by the Confederation of Zimbabwe Industries (CZI) showed that factory capacity utilisation had risen from below 10 percent before the unity government was formed, to about 32,3% now.
"Consequently, signifying this improvement ... overall output grew by 110% in the first six months of the year. At the beginning of the year there was a positive policy change that saw the government introduce the use of multiple currencies," CZI chief economist Lorraine Chikanya said at the launch of the report in Harare.
"This policy framework ushered in a breath of life into what was becoming a dying sector."
The CZI said the unity government had restored confidence, with $1,5-billion being invested in the manufacturing sector, mainly for plant rehabilitation and expansion.
Zimbabwe's average working week, which had come down to two days as firms laid off staff amid hyperinflation, raw material shortages and price controls, is now at five days.
At its peak, the manufacturing sector contributed 22% to Zimbabwe's gross domestic product, 37% of export earnings and accounted for 40% of employment.
The renewed business confidence, however, is at risk now after Tsvangirai and his MDC party decided to boycott the unity government until Mugabe fully implements a power-sharing agreement.
Industry and Commerce Minister Welshman Ncube, from a splinter MDC faction, told industrialists that efforts were underway to resolve the standoff, which had unsettled investors.
Ncube said Zimbabwe's cabinet had, before the MDC boycott, approved a long-awaited bilateral investment protection agreement with South Africa. He, however, did not say if the approved draft excluded land from investments to be protected.
South African farmers have urged their government not to sign any pact that did not include a clause to protect land and related property rights.
"I'm in contact with [South African Trade and Industry] Minister Rob Davies who has received the documentation. By the end of this month, we have planned that we should sign it by then. We are now waiting a response from the south Africans," he said.
Ncube added the government had agreed to use a $500-million IMF loan given to Zimbabwe to repay debt, for infrastructural development and local industries.
"Part of the money will be used to pay off IMF arrears so that we can have access to another IMF loan. We agreed that $150-million of this money should go towards productive sectors such as mining and manufacturing," Ncube said.
Edited by: Reuters

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