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Published On: Fri, Aug 26th, 2016

Central bank bets on manufacturing recovery

BULAWAYO,— Central bank governor John Mangudya believes export incentives in the form of bond notes and a ban on imports will help revitalise the manufacturing industry.

“I am very positive about the economy. Some companies have started exporting their products to Zambia,” Mangudya told The Source on Thursday.

“We are going to see production going up and also we are expecting manufacturing sector to improve capacity utilization this year.”

The bond notes, backed by a $200 million African Export Import Bank (Afreximbank) bond facility, will be paid out to exporters as an extra five percent incentive as government seeks to contain Zimbabwe’s widening trade deficit which reached $3,3 billion in 2015.

Zimbabwe on June 20, also banned the importation of hundreds of items under Statutory Instrument 64 of 2016 to help shore up local manufacturers.

Mangudya blamed policy inconsistencies at dollarisation in 2009 for the demise of industry but said the banking sector performed “exceptionally well” in the first half of the year.

His comments come after the Confederation of Zimbabwe Industries (CZI) said Zimbabwe’s manufacturing capacity utilization would remain flat at 34,4 percent, attributed to capital constraints and antiquated machinery.

“Our manufacturing sector survey will be out in the next 90 days, but we don’t expect total output or capacity utilisation to have grown across the board although a few sectors may have experienced growth,” CZI president Busisa Moyo told The Source recently.

Moyo, however, said exports have grown in some sectors such as packed horticultural products and local niche segments like mahewu production and milk production. – The Source