The 2019 survey report by the Zimbabwe National Chamber of Commerce (ZNCC) on the impact of energy challenges on business paints a grim picture of the state of production in the economy.
Unrelenting power cuts and fuel shortages have devastated the local economy with the value of exports and production capacity taking a huge knock. Foreign currency receipts for the first half of 2019 dropped to US$2,6 billion from US$3,4 billion same period in 2018.
Capacity utilisation in key economic sectors such as mining, manufacturing and tourism has dropped by 15% to 30%, while the cost of production has significantly gone up due to the use of equally scarce diesel in generators to power production lines and business operations. The government’s Treasury department predicts that production in mining will decline by 12,3%, while manufacturing and tourism will contract by 4,3% and 9% respectively.
The 2019 ZNCC survey points that almost all producers on the local market rely on electricity to produce and 85% of them are only getting electricity for a period ranging between six hours to 12 hours per day (less than half a day). This has resulted in massive job retrenchments to cut operational costs and fit contracted manpower to single shifts of five hours per day. Heavy consumers of electricity such as mines and manufacturers are feeling the heat to scale back their operations, thereby managing energy-related production costs.
The Chamber of Mines recently warned that production could slump by at least 30% if the sector is not prioritised in electricity distribution. Zimbabwe’s miners are lobbying the government to allow the sector to import its own power so as to guarantee production, instead of the current situation where they face blackouts for about three days per week.
In terms of the monetary losses to producers, the survey points out that business entities are losing at least ZW$20 000 worth of output and ZW$300 000 worth of sales in one month due to energy challenges. Other losses include loss of key customers (especially in the export market), production stoppages, reduced labour productivity and reduction of profits.
