Omega Ukama 
CABLES maker CAFCA says its sales volumes dropped significantly during the three months to June 2019 due to Zimbabwe’s “recessionary monetary policies”.
This comes as the central bank has adopted a disinflationary monetary policy after raising interest rates and mopping up liquidity from the market, among other measures.
Cafca’s trading update for the quarter under review shows that the company sold 538 tonnes of conductor cabling, down from 582 tonnes sold in same period prior year.
“It should be noted that tonnes sold per month have also dropped going into the fourth quarter,” the listed firm cautioned.
“The drop in local demand is attributed to the implementation of the recessionary monetary policies. The impact of the chronic power shortage in the country makes it difficult to predict future demand for cable,” it added.
The company’s sales volumes for the first six months of the year amounted to
1 384 tonnes, a significant decline from 1 588 tonnes sold during the same period in 2018.
This also comes as the company has expressed concerned over the current foreign currency shortage in Zimbabwe, saying the crisis could lead to “hyperinflation”.
“The company is concerned that the shortage of foreign currency is going to lead to acute hyperinflation and the customers will not be able to either afford of finance purchases from CAFCA,” the company said in statement accompanying its results for the half year ended March 31, 2019.
The country’s inflation increased to a 10-year record of 176 percent in June 2019, after gaining 119,1 percentage points since the beginning of the year.
This has eroded the purchasing power of incomes, which have not readjusted much during the period.
Apart for the adverse effects to demand, CAFCA says it has taken steps to hedge against hyperinflation.
“What is significant to note from the statement of financial position is that there is adequate liquidity to operate and trade for the foreseeable future and adequate hedges in various asset classes against any future hyperinflation.
“There is no exposure to United States dollar liabilities,” the company said.
newsdesk@fingaz.co.zw
