Capital constraints and punitive interest rates charged by local financial institutions continue to threaten the revival of the country’s manufacturing sector.
While financial institutions have posted impressive results and profits in their year ending reports, the manufacturing sector growth paints a contrasting picture of this trend.
Statistics by Treasury in the first quarter bulletin for this year, show that the manufacturing sector is projected to register a modest growth rate of 0.1 percent owing to a number of challenges, among them the high costs of borrowing from local banks.
The subdued appetite by local financial houses to support industry has relegated the industry to slow growth which has been carried over from the previous year resulting in the sector suffering at the expense of a thriving financial sector.
The prevailing interest rates are between 8 to 15 percent with a repayment tenure of 18 months which industry leaders say is not adequate to support the revival of the manufacturing sector according to the Zimbabwe National Chamber of Commerce chief executive officer, Mr Christopher Mugaga.
While it can be understood that the banking sector operates under strict guidelines, industry leaders believe there are other measures which can be implemented by the local banks to support the manufacturing sector and boost the performance of the industry as noted by industrialist, Mr Callisto Jokonya.
The high cost of money has not only weighed down the performance of the industry but has also made it impossible for most industry players to access raw materials to supply consumables to mining companies according to recent findings by the Joint Suppliers and Producers (JSP) committee.
Policy instruments such as Statutory Instrument 64 of 2016 have been important in supporting the revival of the local industry, but such a policy needs to be supported by all relevant actors towards this drive.