‘Poor performance linked to forex crisis’

THE current subdued performance of most Zimbabwean companies is a reflection of the deepening foreign currency crisis, rather than productivity, a listed firm’s executive has argued.
Rob Webster, managing director of Zimbabwe Stock Exchange-quoted cables manufacturer — Cafca, said the situation had been exacerbated by the different perceptions on the value of the United States dollar against the bond note.
“At the moment, performance (of companies) is a function of the amount of foreign currency one has access to and not necessarily a reflection of productivity,” he contended.
“We have generated sufficient cash to finance our refurbishment programme but are failing to get foreign currency,” Webster told The Financial Gazette.
Webster said the post-election government must address the supply side of foreign currency to revive companies’ operations and performance.
Webster said: “We are also struggling to get enough foreign currency to keep our raw materials coming; these are critical issues that government needs to address.”
Companies have been increasingly struggling to access foreign currency, building huge backlogs in raw materials imports payments in the process.
The worst hit are the manufacturing and mining sectors, which import equipment and raw materials, and in turn contribute about 40 percent of the country’s export receipts.
In November 2016, government introduced bond notes as a way of improving liquidity, but the ‘surrogate’ currency has significantly lost value against the US dollar, resulting steep price increases and companies failing to acquire raw materials.
Confederation of Zimbabwe Retailers president Denford Mutashu said the foreign currency shortages are stifling industry growth, adding that government must move fast to address the crisis.
“For production to increase in Zimbabwe, we need foreign currency, which is currently limited, hence the drive to attract foreign direct investment,” he said.
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