Zimbabwe’s industrial narrative has long been dominated by a single, seemingly objective statistic: capacity utilisation. Each year, reports from the Confederation of Zimbabwe Industries (CZI), the Ministry of Industry and Commerce, and international observers highlight this figure as a gauge of industrial health. When utilisation rises, the commentary is upbeat; when it falls, doom and gloom dominate headlines.
By Brighton Musonza
Yet capacity utilisation, while convenient, is not a reliable measure of industrial growth. It tells us only how much existing production capacity is being used — it does not measure whether new capacity is being added, whether productivity is improving, or whether industries are becoming more globally competitive. Zimbabwean policymakers, economists, and business leaders risk drawing misleading conclusions if they rely too heavily on this metric alone.
A deeper dive into the limitations of capacity utilisation highlights why Zimbabwe’s industrial performance requires more nuanced and multi-dimensional analysis.
Old Machinery at Full Throttle: Activity Growth
Capacity utilisation measures the proportion of a plant’s potential output that is being used. A factory operating at 70% capacity might sound robust. But in Zimbabwe, where many industrial plants were constructed decades ago and continue to operate with outdated machinery, high utilisation often signals stress, not progress.
Operating older plants intensively may maintain output levels but does not represent industrial modernisation. Growth is about creating new capacity, upgrading technology, improving efficiency, and diversifying production. Without these elements, high capacity utilisation can be misleading — it can reflect a survivalist economy rather than a growth-oriented one.
High Utilisation: A Symptom of Underinvestment
Unlike in developed economies, where high capacity utilisation often triggers new investment, in Zimbabwe it can indicate capital constraint. Many firms operate close to maximum capacity because they cannot afford to expand. High interest rates, chronic foreign currency shortages, and policy unpredictability discourage investment in new plants, machinery, and technology.
In practical terms, a company running at 85% capacity may simply be straining an old system to meet demand — not preparing for industrial expansion. This scenario is evident in sectors such as cement, sugar, and beverages, where capacity utilisation figures often appear encouraging, yet underlying machinery is obsolete, and output cannot compete internationally.
Low Capacity Utilisation Can Mask Temporary Bottlenecks
Conversely, low capacity utilisation does not automatically indicate structural industrial decline. In Zimbabwe, production cycles are heavily influenced by external disruptions:
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Power shortages and load shedding are affecting factories for weeks at a time
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Foreign currency scarcity, delaying the importation of raw materials
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Logistical challenges, such as poor road networks and transport bottlenecks
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Seasonal demand fluctuations, especially in agriculture-linked industries
These constraints depress utilisation figures temporarily but do not necessarily signal a collapse of industrial potential. Interpreting low utilisation as decline without context can lead policymakers to misdiagnose the causes of underperformance.
Productivity, Innovation, and Value Addition Remain Invisible
Capacity utilisation measures volume, not quality or efficiency. A factory may operate at 60% capacity but produce higher-value, technologically sophisticated goods than a factory running at 90% with outdated machinery.
Zimbabwe’s industrial revival depends not on idle machinery but on productivity gains, technological upgrading, and value addition. A focus on utilisation alone ignores:
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Labour productivity improvements
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Energy efficiency
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Technological intensity of production
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Export readiness
For example, textile factories operating at moderate capacity could be globally competitive if they integrate modern looms and automated cutting systems — yet capacity utilisation would not capture this progress.
The Informal and SME Sectors: The Invisible Industrial Backbone
A large portion of Zimbabwe’s industrial activity now occurs outside the formal sector. Small and medium enterprises (SMEs) and informal manufacturers dominate critical segments:
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Furniture, metalworks, and artisanal fabrication
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Food processing, beverages, and agribusiness
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Small-scale textiles and clothing production
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Vehicle repairs and local electronics assembly
These actors contribute significantly to employment, output, and value addition but are largely invisible in official capacity utilisation surveys. Over-reliance on utilisation data thus misrepresents the true scale and health of the industrial sector.
Profitability and Competitiveness Are Ignored
A factory may operate at high capacity yet be financially unviable. Costs may be high, profits minimal, and competitiveness poor. In Zimbabwe, several high-utilisation firms survive only due to government incentives, preferential access to foreign currency, or quasi-monopolistic positions.
Sustainable industrial growth requires more than capacity usage — it requires profitability, market competitiveness, and resilience to shocks. Capacity utilisation alone cannot indicate whether industries are capable of surviving import competition, global commodity price fluctuations, or local policy instability.
Sectoral Differences Complicate Interpretation
Industries differ in their optimal utilisation levels. Heavy industries, like steel or cement, may operate efficiently at 85–90%, while textile or agro-processing industries may function optimally at 50–60% due to batch production cycles.
Zimbabwe’s aggregate utilisation statistics flatten these sectoral differences, giving a misleading picture of overall industrial performance. Policymakers using aggregate data may overstate the health of sectors that are structurally constrained or underestimate emerging industries with low but high-value utilisation.
External Structural Constraints Distort the Metric
Zimbabwe’s industrial performance is strongly influenced by systemic factors outside the control of individual firms:
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Unreliable electricity supply and high costs
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Foreign exchange shortages affecting imports of raw materials
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Logistics and infrastructure challenges
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Policy uncertainty and inconsistent regulations
Capacity utilisation may appear low not because of weak industrial capacity, but because external factors prevent factories from operating efficiently. Understanding these structural constraints is crucial for formulating effective industrial policy.
Sector-Specific Analysis: When High Utilisation Is Misleading
A sectoral lens reveals why capacity utilisation can paint a distorted picture in Zimbabwe:
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Cement and construction materials: Large cement plants often report 80–90% utilisation. But output growth is constrained by power outages, import dependency on clinker, and limited market expansion. High utilisation masks stagnant production and old technology.
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Textiles and clothing: Factories may operate at 50–60% capacity, yet they are adopting modern looms, digitised cutting, and garment finishing technologies. Moderate utilisation in this context represents upgrading and value addition, not underperformance.
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Sugar and agro-processing: Sugar milling often shows high capacity during crushing season, but low off-season utilisation does not reflect industrial weakness. Investments in packaging and bio-energy by-products indicate diversification and innovation, invisible to utilisation metrics.
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Beverages and bottling: Some bottling plants report high utilisation but rely heavily on imported raw materials and glass bottles. Output volume may be high, but profitability, local value addition, and export competitiveness remain low.
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Metal fabrication and SMEs: Low formal capacity utilisation, yet this sector is rapidly expanding in informal workshops, producing machinery components, furniture, and agricultural tools. Here, low official utilisation understates growth and employment creation.
This sectoral insight demonstrates that capacity utilisation can overstate health in some industries and understate it in others, emphasizing the need for a multi-metric approach.
Toward a Comprehensive Industrial Assessment Framework
Zimbabwe requires a multi-dimensional approach to measure industrial growth. Beyond capacity utilisation, policymakers should monitor:
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Output volume and value: What is actually produced, and at what value?
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Investment in new capacity: Are firms expanding or modernising?
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Labour and energy productivity: Output per worker or per kilowatt of energy consumed.
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Value addition and technological intensity: Are industries producing higher-value goods or relying on low-value commodities?
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SME and informal sector contributions: Capturing the full industrial ecosystem.
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Employment creation and skills development: Industrial growth should generate sustainable jobs.
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Profitability and resilience: Can firms survive shocks and compete regionally or globally?
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Export competitiveness: Are industries able to penetrate regional and global markets effectively?
Historical Perspective: Lessons from Zimbabwe’s Industrial Trajectory
Zimbabwe’s industrial base, built largely between the 1960s and 1980s, once positioned the country as a regional manufacturing hub. Capacity utilisation at the time reflected both productive efficiency and economic expansion. Today, the same metric tells a different story: high utilisation often masks stagnation and ageing infrastructure, while low utilisation frequently reflects systemic bottlenecks rather than lack of demand.
The lesson is clear: past metrics cannot be assumed to measure present realities. Zimbabwe’s policymakers must embrace modern, context-specific indicators to understand the industrial landscape accurately.
Policy Prescriptions: Building a Real Industrial Growth Agenda
To move beyond the illusions of capacity utilisation, Zimbabwe must implement practical reforms and measurement innovations:
Industrial Measurement Reform
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Develop a composite Industrial Performance Index (IPI) that combines output, value addition, productivity, employment, and technological intensity.
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Include informal and SME activity in official industrial surveys to capture the full picture.
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Track sector-specific efficiency benchmarks, rather than relying on aggregate utilisation.
Investment and Modernisation Incentives
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Provide targeted tax incentives and low-interest financing for machinery upgrades and capacity expansion.
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Encourage joint ventures and foreign direct investment in high-potential sectors like agro-processing, textiles, and renewable energy.
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Support adoption of modern technologies to improve energy efficiency and reduce production costs.
Infrastructure and Energy Reform
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Prioritise reliable and affordable electricity for industrial clusters.
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Improve logistics infrastructure, including roads, railways, and port facilities, to reduce supply chain disruptions.
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Ensure consistent foreign currency availability for importing critical raw materials.
Regulatory and Governance Improvements
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Strengthen industrial inspections and compliance frameworks to reduce corruption and inefficiencies.
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Introduce performance-based accountability for industrial incentives to ensure productive investment.
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Improve policies targeting export competitiveness, including trade facilitation and export finance schemes.
Skills and Workforce Development
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Invest in technical training and vocational education aligned with industry needs.
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Encourage SME innovation hubs to improve productivity and value addition.
Conclusion: From Illusion to Insight
Zimbabwe’s fixation on capacity utilisation risks confusing motion for progress. Operating existing machinery more intensively or less intensively does not equate to industrial growth. True growth requires expansion, modernisation, productivity improvements, competitiveness, and sustainable profitability.
Capacity utilisation is a useful indicator, but it is insufficient. Zimbabwe’s industrial policy, investor analysis, and economic commentary must adopt a more nuanced framework that measures what truly matters: the creation of new productive capacity, technological advancement, job creation, and global competitiveness.
Until this shift occurs, celebrations based on utilisation figures will remain illusions of growth, and policymakers may continue to misdiagnose the health of the country’s industrial sector — with significant consequences for the nation’s long-term economic trajectory.
Brighton Musonza (MBA), BSc Business Management, Chartered Institute of Management (CIM), Business Analytics and SAP technologies. Expertise in business and managerial economics.
