Surface Wilmar, the country’s largest cooking oil manufacturer, says it owes its external suppliers US$22 million because of acute foreign currency shortages locally.
Source: Forex shortages cripple cooking oil maker – The Standard November 11, 2018
BY BUSINESS CORRESPONDENT
The revelations were made during a recent tour of the firm’s Chitungwiza operations by Finance minister Mthuli Ncube, who wanted to understand challenges facing the manufacturing sector.
Surface Wilmar is a joint venture between the Somani family, Wilmar International Ltd and the government of Zimbabwe through the Industrial Development Corporation. The company’s flagship product is Pure Drop cooking oil.
The firm processes soya beans and cottonseed to extract oil, with the residual high protein being used for stockfeed formulations.
It employs 450 people as direct labour and indirectly engages at least 1 000 people in downstream sales and distribution.
At least 98% of the company’s workforce is from Chitungwiza.
Surface Wilmar acting CEO Sylvester Mangani told journalists after Ncube’s tour that they were struggling to get credit lines to import raw materials.
“What has happened is that for a period of time we have had a good relationship with our suppliers and we were getting good credit lines from them, but for the last six months we have not been able to service them,” he said.
“Unless we pay back, that credibility will be lost.
“The company has failed to service external loans due to lack of forex.
“Our external debt now stands at $22 million and it is attracting interest daily in nostro dollars.”
The company’s capacity utilisation for packaged cooking oil, soya meal and cotton meal stands at 26%, 8% and 11% respectively.
Mangani said the low capacity utilisation was due to the unavailability of inputs and lack of foreign currency.
He said the company would soon embark on a contract farming programme where at least 100 000 hectares of soya beans would be grown under irrigation in five years’ time.
Mangani said the project would save the country $50 million in foreign currency annually.
However, Mangani said government’s decision to lift a ban on the importation of selected basic commodities was “a kick in the teeth” for local industry.
“What we are saying is that the government has said people can use their free funds to import cooking oil from South Africa, but we are saying we can supply it cheaper,” he said.
“Those same free funds can then be channelled towards us so that we import the raw materials to supply locally.”
Surface Wilmar is the main investor in Olivine Industries with a 65% stake while the Zimbabwean government holds a 35% stake.
Olivine said it needed foreign currency to buy modern equipment to enhance its competitiveness.
Ncube said the government would support the modernisation of Olivine to improve the value of its equity.