Zimbabwe runs dry

 

Acute foreign currency shortages in Zimbabwe will sober up many as the country’s leading beer and soft drinks manufacturer finds itself with about a week’s supply of raw materials.

Delta Corporation Limited‚ the bottlers of Coca Cola‚ beer lagers such as Castle‚ Castle Lite‚ Zambezi and opaque beer brand Chibuku to mention a few‚ is riling in foreign debt while it struggles to source foreign currency.

Responding to inquiries from state daily the Bulawayo Chronicle‚ the company’s corporate affairs manager Patricia Murambinda said the forex situation in the country has a negative impact on their operations. “This is impacting on our production operations. We continue to make presentations to RBZ (the reserve bank) and our banks for priority forex payments‚” she said.

Murambinda said the hardest-hit division was the Coca Cola production line‚ left with a week’s supply of concentrate. “We were able to pick up a small order of concentrates from the available credit last week with the supplier… This is expected to cover production for a week‚” she added.

Delta is one of the country’s biggest tax payers‚ contributing more than $200-million per year.

Reserve Bank governor Dr John Mangudya is on record saying the country has no capacity to build foreign currency reserves from export earnings because of low productivity.

As such the little foreign currency that finds itself in state coffers is allocated to paying for imports such as electricity and fuel.

From time to time‚ South Africa’s power utility Eskom threatens to cut off Zimbabwe’s power supply over a long-standing debt. Since it’s a priority‚ Zimbabwe pays an average of $10-million to Eskom weekly.

But with the tobacco auction season underway‚ foreign currency reserves are set to improve. So far‚ tobacco worth $110-million has been sold to major buyers such as South Africa‚ China and Belgium. The crop is the country’s second-biggest earner‚ after mining.

However‚ with the way the foreign currency parallel market has grown in the space of a year‚ most of the cash sales receipts are being diverted to where $1 trades at 1:1‚45 to the local bond notes.

“At the end government will rake in at most 50% of what would have been made in American dollars because illegal money dealers are making their presence felt at the auction floors‚ offering bond notes for dollars. They have an upper hand because banks are failing to even source $300 weekly for withdrawals in a special arrangement with tobacco farmers‚” said economist Stevenson Dhlamini of the National University of Science and Technology (NUST).

Buying and selling money on the black market was banned in September last year by then-president Robert Mugabe. Still companies have no option but to also buy on the black market‚ further pushing commodity prices up.

by James Thompson in Harare – TimesLIVE

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