By Lucy Phiri
THE manufacturing sector in Zambia has been recording steady and positive general improvement in the first half of the year 2023, despite being affected by the instability of the exchange rate, the Zambia Association for Manufacturers (ZAM) has disclosed.
And Ms Muntanga Lindunda says the manufacturing sector is highly optimistic that the manufacturing sector is going to record exponential growth that Zambia has reached the Debt Agreement with her Official Creditors under the G20 common framework.
Ms Lindunda, the ZAM chief executive officer says in first quarter one of 2021, the manufacturing sector’s value-added percentage growth rate had risen to 3.1 percent from 2.8 percent in the same quarter of 2022 whilst in 2023, the sector had recorded a positive growth of about 1.3 percent.
“This shows that there has been an improvement in the performance of the sector in the past three years. Likewise, the sectors’ value-added growth rate in the second quarter of 2021 was 9.2 percent compared to 11.7 percent in the second quarter of 2022.”
“This once more highlights that in spite of the various headwinds the sector has and continues to grapple with, it is on a positive trajectory, judging by value-added growth,” Ms Lindunda said.
Ms Lindunda said the manufacturing sector had been beset by a number of challenges in the first two quarters of 2023 amongst which were electricity disruptions.
She said electricity load-rationing had affected the production of many manufacturing companies, especially the Small and Medium Enterprises (SMEs) which did not have the capacity for alternative sources of power such as generators.
Ms Lindunda said some manufacturers using machinery which required significant time to heat up before commencement of production were heavily affected during the period ZESCO was implementing load-rationing schedules
“Early this year, the country faced an electricity supply deficit which emanated from low water levels in the main reservoirs such as Kariba Dam due to low rainfall. Since Zambia’s power generation is predominantly hydro based, the declining water levels and low electricity generation created a mismatch between demand and supply across the country resulting in the implementation of load management by ZESCO,” Ms Lindunda explained.
Ms Lindunda stated that due to the energy intensive nature of the manufacturing sector, with electricity being a key input in production processes, load-rationing affected production of many companies.
She also cited the instability in the exchange rate between the local currency, the Kwacha and the dollar has having created unpredictability in the manufacturing sector.
Ms Lindunda stated that the kwacha-dollar exchange rate was characterized by fluctuations in the first two quarters of 2023, thereby affecting manufacturers who were highly dependent on foreign currency when importing raw materials.
Ms Lindunda said the manufacturing sector was also affected by the cost of doing business which she said had remained high.
“The cost of doing business in the country still remains high due to excessive permit and licensure requirements. ZAM has been advocating for streamlining and harmonization in these processes. This challenge also acts as a barrier to Foreign Direct Investment in the country as potential investors become averse to invest in fear of going through cumbersome procedures in obtaining this documentation” Ms Lindunda said.
And Ms Lindunda says the manufacturing sector is highly optimistic that the manufacturing sector is going to record exponential growth that Zambia has reached the Debt Agreement with her Official Creditors under the G20 common framework.
“In quarters 3 and 4, ZAM expects the sector to perform relatively better with Zambia reaching the Debt Agreement with the Official Creditors under the G20 common framework. The Debt Agreement is likely to result in a stable macroeconomic environment through the exchange rate and annual inflation rate. This will ease pressure and improve predictability in the business environment thereby enhancing planning from the manufacturers’ perspective,” she said.
She said although ZAM was expecting to see some stability in the fuel pump prices, the association would continue to advocate for quarterly reviews of fuel pump prices.
This article is supported with the WAN IFRA Women In News (WIN) Social Impact Reporting Initiative (SIRI) gender equality, diversity and inclusion (GEDI) Information in this article does not reflect the views of WAN IFRA Women In News.
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