HomeBusiness DigestDecline in building activity hits UBM

Decline in building activity hits UBM

Eric Chiriga

RADAR Holdings Ltd says trade volumes at its division, United Builders Merchants (UBM) have decreased because of a decline in building activity in the country.

e=”Verdana, Arial, Helvetica, sans-serif”>Kenneth Schofield, the chairman of the group, said their challenge was to trade at levels that would cover costs.

He said Mcdonald Bricks, another division of Radar, was operating at 40% of capacity and that downstream activities looked bleak.

“The availability of foreign currency to import products that make up a significant portion of the division sales has been, to all intents and purposes, non-existent,” Schofield said.

“Private housing construction is extremely low in the southern part of the country.”

Schofield said while demand exists on the export market, the unrealistic exchange rate on the foreign currency auction floors prohibits any meaningful increase in export revenue.

“The measures put in place by the financial authorities have done little to stimulate demand. They have to some extent given some respite to companies facing collapsed revenue streams, but the underlying weakness of the economy remains and has effectively continued to deteriorate,” Schofield said.

The Reserve Bank of Zimbabwe (RBZ) established the foreign currency auction in a bid to kill a flourishing parallel market.

Schofield said trading continues to lag behind inflation which now stands at 132% after falling from record levels of 600%.

“Border Timbers is experiencing one of its most challenging periods,” Schofield added.

He said the combined effects of a full month’s stoppage in 2004, an exchange rate regime that was crippling to the export sector and wanton forest fires had had a significant impact on the company’s position in the market place.

“Inability to supply timeously into the United States and regional markets have meant that while demand remains strong, Border is unable to meet customer requirements,” he said.

Schofield said the past few years had rendered forecasting of the operating environment completely misleading.

He said with respect to the export market, a sensible exchange rate policy was critical.

He said it was unhelpful to ignore the realities of the value of the Zimbabwe dollar.

“Our economy is weak, agricultural output this year will be near catastrophic and our currency is significantly overvalued.”

Radar is the holding company of UBM, Mcdonald Bricks, Bulawayo Toyota and Border Timbers Ltd.

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