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Zimbabwe is battling to prop up its export sector.
This comes amid concerns that the government is throttling a key sector that is sustaining its foreign exchange requirements through delays in processing export permits, failure to speedily clear payments for imported raw materials and impounding of international currency earnings by local firms.
Major export companies from Zimbabwe include South African gold and platinum mining groups, such as Impala Platinum and Anglo American Platinum, and Metallon Corporation and tobacco processing companies.
Agroprocessors and cement makers, PPC among them, are also key exporters.
Surface Wilmar, a manufacturer of edible oils, soaps and other related products, which also exports into the region, said that it was facing delays in getting export certificates.
“Efficient industries that can export their produce in the region should be allowed to export their product without any need of export licences,” said the company, which is majority owned by Singapore-based Wilmar International.
“In today’s scenario, we struggle to get export permits for our value-added and branded products from the ministry [of industry and commerce] due to the current bureaucratic approach.”
The export market is seen as a lucrative bet by Zimbabwean companies as it gives them a buffer against cost headwinds.
Local suppliers are pegging prices in line with the rise in parallel market rates for bond notes versus the US dollar.
The Reserve Bank of Zimbabwe said this week that the “bulk of the country’s exports comprise”, among other commodities, “gold, flue-cured tobacco, ferrochrome, nickel, chrome and diamonds” which altogether contribute 88% of export earnings.
John Mangudya, the governor of the Bank, has also sought to address some of the constraints that exporters in Zimbabwe are facing.
However, gold and platinum mining companies in the country are still restricted in terms of accessing their foreign exchange earnings as the central bank retains nearly three quarters of their international currency earnings and credits their accounts with local currency.
Chrome and tobacco export companies also retain a smaller portion of their export earnings.
“It is also essential to note that all exporters retain 100% of their export proceeds with the exception of gold producers that retain 30% of export proceeds; platinum, diamonds and chrome 35%; and 20% for tobacco and cotton producers,” Mangudya confirmed.
Mining companies say the failure to access their foreign exchange receipts in hard currency is crippling their operations as they are unable to settle international payments on time.
Mzi Khumalo, the chairperson of Metallon, has proposed to pay suppliers through gold claims.
Other local manufacturers also say the “ease of doing business framework” requires further “refinement” as “decision making is somewhat slow, no timelines are set for processing (documentation) and there are no clear accountabilities” for government officials tasked with speeding up necessary reforms to attract new investors.
Industrialists are urging the government of President Emmerson Mnangagwa to “preapprove the list of raw materials” critical for key industries as well as the export sector.
This is projected to improve the viability of manufacturers and to aide in the retooling of local industries.
Other local miners are seeking to enhance their position through growing the export market for their minerals.
Hwange Colliery managing director, Shepard Manamike, says the coal miner has lined up export deals with new customers in Zambia and South Africa as it seeks “sources for market share growth for the export business”.
In the half year to the end of June, Hwange – which made a loss of $23 million – had targeted export volumes of 20% but only managed 5%.
Other Zimbabwean manufacturers in the cement category have also been trying to raise funds through venturing into export.
Lafarge Cement Zimbabwe said it has trialled exports of clinker material into the region.
“In an attempt to generate foreign exchange, we exported 20 000 tons of clinker at lower margins, which had a negative impact on profitability. Continuous delays in foreign payments could seriously impact plant operations.”
The challenges have also been worse for companies importing raw materials, with Addington Chinake, chairperson for Innscor Africa, which is a fast food and poultry business, saying the company was engaging with the government to secure “importation permits, foreign currency and duty exemptions” for inputs and other raw materials.
Zimbabwe’s economy, which has struggled for liquidity and productivity, is now expected to grow by about 5% this year, according to new government projections.
Inflation in the country is expected to close around 5%, according to the central bank.
