B ALANCE EN EL `` STRIPPER ´´ LATERAL

According to Dube, & Chipumho (2016),Besada & Moyo (2008) and the UNDP (2010), Zimbabwe

had a well-developed manufacturing sector in sub-Saharan Africa up to the late 1990s. In addition, this sector has traditionally been a key driver of economic growth, GDP, export revenue and employment. The manufacturing sector produced diversified products ranging from foodstuffs to steel products (Kanyenze et al. 2011). Dube, & Chipumho (2016), Dube (2011), Sibanda and

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Makwata (2017) and UNDP (2000) indicates that, from the 1980s up to late 1996, the manufacturing sector experienced growth in terms of production, capacity utilisation and contribution to employment. The manufacturing sector was the biggest contributor (22%) to GDP, followed by agriculture (14%) (CZI 2012: 5). It contributed a third (± 15%) of the country’s foreign exchange earnings, a third to the formal employment and was one of the largest producers of export goods (CZI 2013: 6).

In terms of scope and structure, the Zimbabwean manufacturing sector consists of 10 sub-sectors, categorised according to the International Standard for Industrial Classification (CZI 2014; Dube & Chipumho 2016; Dube 2011; Kanyenze et al. 2011).

According to the CZI (2014) and Kanyenze et al. (2011) the top sub-sectors in terms of contribution to the total manufacturing output are the -

(a) Food and Beverages sub-sector.

(b) Metals and Metal Products sub-sector.

(c) Paper, Printing and Publishing sub-sector.

(d) Non-Metallic Minerals sub-sector.

Furthermore, according to CZI (2014: 35) and Davis et al. (2012: 19), the Food and Beverages, Paper, Printing and Publishing sub-sectors, Non-Metallic Minerals sub-sector and the Metal and Metal Products sub-sectors contribute approximately 90% of the manufacturing output and 80% of the employment in the manufacturing sector. The four sub-sectors are the main drivers of the performance of the manufacturing sector (CZI 2014).

Firms in the Food and Beverages sub-sector have operated at a capacity utilisation exceeding 75% (Ministry of Finance 2013: 23) and have recorded positive profit margins (ZSE 2014). In 2013, the performance of this sub-sector, as measured by the Manufacturing Volume Index, was 118. It was somewhat above the average manufacturing index of 114 for this sector (Ministry of Finance 2014: 21). The above statistics reveal that these manufacturing sub-sectors remains the main contributor to output and employment in this sector.

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The Paper, Printing and Publishing sub-sector has benefited considerably from increased activities in the Information and Technology sub-sector. Although its capacity utilisation has remained above 50%, it has recorded both low and positive profit margins. In 2013, the performance of this sub- sector, as measured by the Manufacturing Volume Index was 116. It slightly exceeds the average Manufacturing Volume Index of 114 for this sector (Ministry of Finance 2014: 21) and contributes positively to the performance of firms in the manufacturing sector.

It is envisaged that the Non-metallic, and Metal and Metalwork Products sub-sectors will lead the growth of the manufacturing sector, following the surge in construction works and improved prices. In 2013, profit margins remained positive for these two sub-sectors and their performance, as measured by the Manufacturing Volume Index, has remained high at 160. This Manufacturing Volume Index exceeds the average performance of this sector at 114 (Ministry of Finance 2014: 21).

To indicate the importance of this study, it is necessary to highlight the role of the manufacturing sector in Zimbabwe. According to Davis et al. (2012), Dube & Chipumho (2016), Dube (2011) and Kanyenze et al. (2011) the manufacturing sector can promote the economic growth of a country. This sector supports other sectors such as the Mining and Agricultural sectors through backward and forward linkages (CZI 2013). The rest of the economy also benefits from the good performance of the manufacturing sector through increased production of goods and services, as well as the creation of employment (Kanyenze et al. 2011). The manufacturing sector can generate foreign currency for the country which, in turn, ensures that the country can procure capital equipment and new technology. Ultimately, it increases productivity of other sectors (Kanyenze et al. 2011).

Davis et al. (2012), Kanyenze et al (2011), Dube & Chipumho (2016) and Dube (2011) however, indicate that, despite its considerable contribution to the Zimbabwean economy for many years, the manufacturing sector’s performance started to decline from 1996. Capacity utilisation of firms declined from 60% to less than 40%. The contribution of the manufacturing firms to GDP also declined from 23% to 8% (Kanyenze et al. 2011: 142).

In 2009, the adoption of the United States of America’s currency, the American dollar, as Zimbabwe’s main trading currency led to the Zimbabwean economy becoming more stable. Growth of approximately 5% was achieved, with single digit inflation, and improvement in capacity utilisation in some sectors of the economy (Ministry of Finance 2014:35). However, despite the

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stabilisation of the economy, the performance of the manufacturing sector in terms of capacity utilisation, contribution to the economy and employment, has remained below 50% (CZI 2012: 6).

The same view is expressed in the report of the Ministry of Finance (2014: 36), in that the Zimbabwean manufacturing sector has been characterised by:

(a) Massive de-industrialisation;

(b) Company closures and downsizing, and

(c) A decline in capacity utilisation by 50% since 1996.

(Dube & Chipumho 2016; Dube 2011; Kanyenze et al. 2011)

Apart from the above, only four out of 70 manufacturing firms listed on the Zimbabwean Stock Exchange are performing above 50% of their capacity utilisation level (CZI 2013: 12). This not only indicates a significant decline in the performance of the manufacturing sector, but also a downward trend in its contribution to the economy in general.

According to Saungweme, Matsavi & Sakuhuni (2014), the manufacturing sector is struggling to survive with most firms operating far below full capacity. According to Saungweme et al. (2014:8), about 500 firms had closed between 2000 and 2001. In Bulawayo alone (the second industrial hub of Zimbabwe), more than 100 firms have closed, with a total of 12 000 workers having been retrenched since 2000 (Saungweme et al. 2014: 4). The CZI (2013) indicated in one of its 2013 survey that the manufacturing sector has ground to a halt with Zimbabwe being turned into a so- called large wholesale firm stocking products obtained from neighbouring countries. This trend signifies poor performance of the firms in the manufacturing sector.

Although the firms in the manufacturing sector have experienced a general decline in performance, there are significant, variations in the performance of firms in each of the ten sub-sectors. Some firms have recorded positive profits and capacity utilisation while other firms have experienced negative capacity utilisation and profits (CZI 2015). Understanding the relationships between strategies and performance of manufacturing firms therefore is one of the vital steps in the search for possible solutions to improve the general performance of manufacturing firms.

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