HARARE – Zimbabwe’s manufacturing sector recorded a year of steady but uneven recovery in 2025, with production rising and firms cautiously expanding, even as deep structural weaknesses in exports, input dependency and formal employment persist, according to the latest industry survey by the Confederation of Zimbabwe Industries (CZI), as reported by NewZWire.
The annual manufacturing sector survey, which tracks firms of varying sizes across the country, paints a picture of an industry growing in output but still operating well below full capacity, with significant reliance on imports and limited integration into global markets.
Output rises, but capacity still underutilised
Manufacturing output grew by 13% in 2025, while turnover increased by 12%, signalling continued recovery momentum. Employment also rose by 6%, with companies adding an average of five workers each over the period.
Capacity utilisation improved to 55.9%, up from 52.3% in 2024, marking the fourth-highest level recorded since CZI began tracking the indicator in 2009. However, nearly half of installed industrial capacity remains unused, underscoring persistent inefficiencies in the sector.
Medium-sized enterprises led the expansion, posting output and turnover growth of 21.2%. Large firms contributed most to job creation, while smaller manufacturers continued to lag due to constrained access to finance.
Notably, about 35% of firms reported investing in capacity expansion, indicating growing confidence in medium-term demand conditions.
Heavy reliance on imported inputs persists
Despite a visible increase in locally branded products on the market, Zimbabwean manufacturers remain heavily dependent on imported raw materials. The survey shows that 54% of all industrial inputs were sourced externally in 2025, up from 52% in 2023.
Nearly 60% of firms cited shortages of local raw materials as the primary reason for importing inputs, highlighting ongoing gaps in domestic value chains.
Exports remain a critical weakness. Less than 5% of total manufacturing output is exported, with firms citing high production costs, transport bottlenecks, competition from imports and limited access to finance as major constraints to competitiveness.
Technology adoption boosts performance, but uptake remains limited
The survey also points to a widening productivity gap between firms investing in technology and those that are not. Only one-third of manufacturers upgraded their technology in 2025, yet those that did recorded turnover growth of 18.4%, compared to just 8.4% for non-adopters.
However, advanced digital transformation remains limited. Artificial intelligence adoption stands at only 12%, with firms citing high costs and a shortage of technical skills as key barriers.
Labour shifts toward flexible arrangements
The structure of employment in the sector is also changing. The share of non-permanent workers has increased to 36%, up from 28% in 2023, reflecting a cautious approach by firms despite improving output conditions.
Analysts say this shift suggests manufacturers are prioritising operational flexibility over long-term hiring commitments amid lingering economic uncertainty.
Industrial renewal and product diversification
There are, however, signs of gradual industrial renewal. Nearly 60% of manufacturing plants are less than a decade old, while only 4% are more than 50 years old. A further 4% of new plants were commissioned in 2025 alone.
Firms are also increasingly diversifying production. The average manufacturer now produces two product categories, with six out of ten firms engaged in multi-product lines, indicating efforts to spread risk and tap into new markets.
US dollar dominance continues despite currency policy shifts
Despite government efforts to promote the Zimbabwe Gold (ZiG) currency, the US dollar remains dominant in the industrial sector. The share of manufacturing revenue earned in US dollars rose to 76% in 2025, up from 65% in 2023, reflecting continued preference for hard currency transactions across supply chains.
Cautious optimism for 2026
Looking ahead, the sector remains cautiously optimistic. About 63% of manufacturers expect improved performance in 2026, while 55% are positive about the broader economic outlook.
While the data suggests steady progress, the CZI survey highlights that Zimbabwe’s manufacturing recovery remains fragile, constrained by structural dependencies and limited export penetration, even as firms slowly modernise and expand capacity.
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