The Sunday News
Dumisani Nsingo Business Reporter
THE country’s sole manufacturer of arms and ammunition, Zimbabwe Defence Industries (ZDI), which is the only company that has remained on the European bloc sanctions is facing viability problems due to capital squeeze, low production and slow uptake of stock, an official has said. ZDI general manager Retired Colonel Tshinga Dube said the prevailing economic challenges that have affected the country’s manufacturing sector have not spared the company.
He said the ammunition manufacturer has since last year grounded operations and efforts to revive production have been futile.
“ZDI is going through very difficult times as is the manufacturing sector as a whole. One of the factors being that our wages and salaries are too high especially for a country which is struggling economically like ours.
“In China a general hand worker gets about $50 and here the minimum wage is about $300 yet our overheads such as electricity and water charges are higher. For instance manufacturing one round of cartridge or bullet will cost $1,50 yet in China it costs 10 cents,” said Rtd Col Dube.
Confederation of Zimbabwe Industries president Mr Charles Msipa concurred with Rtd Col Dube’s sentiments stating that local firms experience huge salary bills compared to others in the region.
“Obviously there are a number of key cost drivers affecting businesses in the country and labour is one of them. The cost of our labour is higher than that of Zambia, Botswana and Mozambique.
“Labour or high salary and wage bill is one of the factors eroding the competitiveness of local industries with those in the region,” he said.
Rtd Col Dube said high production costs were affecting the competitiveness of the company’s products.
He said the company needed about $30 million for recapitalisation and further hinted that “no production was taking place at the moment”.
He said: “We need about $20 million for refurbishing and replacing some of our machinery and we also need about $10 million for the purchase of raw materials and payment of overheads.
“However, with the prevailing economic environment we are very pessimistic about our future because at this rate it’s better to close shop. This company should be treated as a strategic entity not as a commercial unit.”
He said the company has a large stock pile of ammunition but was failing to dispose it to its regular clients, the Zimbabwe Republic Police and the Zimbabwe National Army owing to late payments.
Although ZDI’s primary aim was the reduction of Government expenditure, lack of economies of scale has meant that ZDI has found itself competing with other international suppliers on the open market.
“At the moment we are not producing at all because our clients the ZRP and ZNA have a challenge when it comes to payment.
“They take up to six months to settle their accounts due to funding constraints. We are now manufacturing as per order and of course with payment upfront to enable us to buy raw materials,” Rtd Col Dube said.
He said as one of the measures to keep the company afloat, ZDI was looking forward to diversifying.
“We are exploring various diversification initiatives to make sure we get out of the woods. We once tried to get into scrap metal and heard that it was controlled by the Ministry of Mines and Mining Development and it didn’t give us the licence.
“We are under sanctions internationally as a company and we seem to be under sanctions in our country owing to the regulations which bar us from improving our business,” Rtd Col Dube said.
ZDI manufactures small arms ammunition, both ball and blank in 7.62 x 39 mm and 7.62 x 51 mm calibres. At its filling plant outside Harare, ZDI fills mortar shells in the calibres of 60 mm, 81 mm and 120 mm and has the capacity to fill artillery shells up to 155 mm, rocket launchers, and fragmentation hand grenades. ZDI also trades in military-related products that it does not manufacture, such as uniforms, footwear, head-dress, ration packs and tents.
