Friday, 18 September 2015

Capacity utilisation shows little relation to growth in Burundian companies

Here's a graph showing how much of their total capacity was utilised by Burundi's companies in the year 2013-2014.  Capacity utilization is the company's output as a percentage of the maximum possible output with their available staff, machinery, and factories.


A quarter of companies were working at full capacity.  However, most weren't, and the average utilisation is 70 percent.

So what makes some Burundian companies use more of their capacity?  It could be sales growth - if a company is doing well, then the owners and managers could push the company hard to benefit from the strong performance.  But the data says otherwise.  The next graph shows the annual growth rates plotted against capacity utilisation for a selection of Burundian companies, with a best fit line included.


There is very little relation between growth and utilisation.  It's a similar story for the relation between growth and hours worked per week.

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