HARARE – Zimbabwe’s manufacturing sector is entering a new phase of industrial recovery, with evidence suggesting that businesses are moving beyond survival and increasingly investing in expansion, technological modernisation and export competitiveness. New research indicates that while significant structural bottlenecks remain, the sector has begun laying the foundations for a more resilient and regionally integrated industrial economy.
The findings, presented by Africa Economic Development Strategies (AEDS) Executive Director Professor Gift Mugano during the Zimbabwe Industrialisation Conference and Expo (ZICE 2026) in Harare, portray a manufacturing sector that is gradually repositioning itself as a key driver of economic growth. Held under the theme “Accelerating Industrial Growth through Regional Value Chains, Innovation and Trade,” the conference brought together government, industry and development stakeholders to evaluate Zimbabwe’s industrial trajectory and formulate strategies for the next phase of economic transformation.
The study, based on a nationwide survey covering more than 2,000 businesses and key industry stakeholders across all ten provinces, reveals a notable shift in corporate investment behaviour. Instead of borrowing merely to finance working capital or sustain day-to-day operations, manufacturers are increasingly directing capital towards productive assets, including modern machinery, factory upgrades, logistics infrastructure and export market development. This transition signals growing confidence in the sector’s medium- to long-term prospects and reflects a broader movement towards industrial capital formation.
According to the report, more than four-fifths of firms accessing finance are investing in activities that expand productive capacity and improve competitiveness. Investment in new machinery emerged as the dominant priority, while firms are also allocating resources towards warehouse infrastructure, export market expansion, renewable energy systems, digital technologies and product innovation. The report argues that this pattern of investment is consistent with economies transitioning from recovery to industrial expansion, where capital increasingly finances productivity improvements rather than operational survival.
Export performance has strengthened considerably over the past four years. Manufactured exports rose from US$175.8 million in 2021 to US$228.7 million in 2023 before almost doubling to US$437.6 million in 2024 and reaching US$584.8 million in 2025. Maintaining this trajectory will be essential if Zimbabwe is to achieve its target of US$1 billion in manufactured exports by 2030. Manufacturing’s contribution to Gross Domestic Product has also continued to edge upwards, rising from 16.8 percent in 2025 to 17.1 percent during the first quarter of 2026, reinforcing the sector’s position as one of the country’s principal engines of economic activity.
Regional markets are beginning to play an increasingly important role in this expansion. Exports to the Common Market for Eastern and Southern Africa (COMESA) have grown significantly, supported largely by iron and steel products, highlighting Zimbabwe’s potential to integrate more effectively into regional value chains under COMESA, SADC and the African Continental Free Trade Area (AfCFTA). The report argues that these regional trade frameworks provide Zimbabwe with an opportunity not only to substitute imports domestically but also to establish itself as a competitive manufacturing hub serving neighbouring markets.
Despite these gains, the report identifies substantial structural weaknesses that continue to constrain industrial performance. Nearly 44 percent of installed manufacturing capacity remains idle, representing one of the largest untapped sources of economic growth. Businesses continue to cite unreliable electricity supply, high energy costs, limited access to foreign currency, exchange-rate volatility, expensive long-term finance, regulatory complexity and competition from the informal economy as the principal barriers preventing factories from operating at full capacity.
Another major concern is Zimbabwe’s continued dependence on imported industrial inputs. More than half of all manufacturing raw materials are sourced from foreign suppliers, reflecting weak domestic supply chains and the absence of a sufficiently developed intermediate goods sector. Only a small proportion of firms reported strong commercial relationships with local suppliers, while manufacturers identified the limited availability of domestic inputs, lower international prices and superior imported quality as the primary reasons for relying on external markets.
The report argues that reducing this import dependency represents one of Zimbabwe’s greatest industrial opportunities. It estimates that goods currently imported at a value exceeding US$3 billion could potentially be produced locally through targeted investment in fertilisers, pharmaceuticals, fabricated steel, plastics, chemicals and agro-processing. Developing these industries would deepen domestic value chains, create employment, improve foreign currency retention and strengthen industrial resilience.
To address these structural weaknesses, the study recommends the deliberate development of a domestic intermediate goods industry capable of supplying manufacturers with locally produced industrial inputs. It also calls for stronger supplier development programmes anchored around large manufacturing firms, better alignment of Special Economic Zones with strategic value chains and greater integration of small and medium-sized enterprises into formal industrial supply networks. Such measures would strengthen domestic industrial linkages while reducing Zimbabwe’s exposure to external supply chain disruptions.
The research also highlights growing recognition among manufacturers that future competitiveness will increasingly depend on technological capability. Although investment in artificial intelligence and digital technologies remains relatively modest, firms that have embraced digital transformation are already reporting measurable productivity improvements. As global manufacturing becomes increasingly data-driven, Zimbabwe’s ability to adopt automation, digital production systems and advanced analytics will play an important role in determining its long-term competitiveness.
Environmental, Social and Governance (ESG) standards present another emerging policy challenge. While many manufacturers have introduced basic sustainability initiatives such as waste management and energy efficiency programmes, relatively few currently comply with international carbon reporting, emissions monitoring or broader ESG disclosure requirements. As international markets progressively tighten environmental standards, failure to improve compliance could become a significant non-tariff barrier for Zimbabwean exporters.
The report concludes that Zimbabwe’s industrial recovery is entering a more mature phase characterised by investment-led expansion rather than survival-driven activity. However, sustaining this momentum will require coordinated policy reforms that improve electricity reliability, expand affordable long-term industrial finance, stabilise the macroeconomic environment, strengthen domestic supply chains and accelerate investment in technology and value addition.
Professor Mugano argues that Zimbabwe now possesses a unique opportunity to reposition manufacturing as the country’s primary engine of structural transformation. By leveraging regional trade agreements, promoting import substitution, encouraging technological upgrading and strengthening domestic industrial linkages, the country can significantly expand manufacturing output while reducing dependence on imported products.
The report concludes that Zimbabwe’s industrial future will depend less on producing a larger volume of raw commodities and more on building competitive industries capable of converting those resources into higher-value manufactured products. With more than US$3 billion worth of imports potentially substitutable through domestic production, and regional markets offering substantial demand for manufactured goods, the foundations now exist for Zimbabwe to transition from a commodity-dependent economy towards a more diversified, export-oriented industrial nation.
