Mishma Chakanyuka, Staff Writer 
SUGAR producer Hippo Valley Estates (Hippo Valley) is fretting over the increasing number of suppliers preferring to be paid in foreign currency at a time the company’s sales mix is witnessing a surge in local currency transactions.
The local currency which has been relatively stable since its introduction in April this year has slightly been volatile during the past two months prompting some economic actors to prefer the stable US-dollar in business transactions.
The development comes at a time when most formal businesses are reporting significant increases in local currency (ZWG) sales, making it difficult to reconcile with suppliers opting for US$ payments.
“Currency dynamics have had a negative effect on the cost of doing business as the company is currently experiencing a mismatch between the ZWG and USD on revenues and expenditure where the currency mix on revenues is currently showing a decrease in USD denominated sales and an increase in ZWG denominated sales while providers of goods and services are currently preferring settlement more in USD than what the company is able to generate from the normal sales,” Hippo Valley chairman Canaan Dube said in the first quarter trading up for the period ended June 30, 2024.
“While the introduction of the new currency has demonstrated its potential to anchor the economy through stabilisation of prices, and restoring confidence, there is currently a cashflow mismatch between the two major trading currencies (ZWG & USD) which is resulting in limited USD denominated receipts than required for critical imports and other local supplies which are currently priced in USD,”
“The Company continues to engage customers and suppliers of goods and services for a win-win currency mix on settlement to ensure business viability and sustainability,” said Dube.
Authorities have however been pushing for the widespread use of the local currency despite it facing defiance from the market.
During the quarter that ended 30 June 2024, the company’s domestic sales for the quarter dropped by seven percent in comparison to the prior period, with the spill over effects of duty-free sugar imports still noticeable despite the repeal of Statutory Instrument 80 of 2023.
Additionally, sales performance was impacted by a slow start from the country’s sugar refineries- but this has since recovered.
desk@fingaz.co.zw
