HUNYANI Holdings Ltd (Hunyani), one of the largest paper manufacturers in Zimbabwe, says the strengthening of the Zimbabwe dollar has made exports unviable and resulted in the mill withdrawing f
rom the East African market.
The Zimbabwe dollar began gaining against other currencies such as the United States dollar after the implementation of the monetary policy and the foreign currency auction by Reserve Bank governor Gideon Gono.
However, the foreign currency auction system will not be able to raise enough foreign currency, Hunyani company secretary Peter Marumahoko said.
“Foreign currency availability through the auction system is uncertain,” he said.
He said the authorities should implement further measures to stimulate exports and therefore earn more foreign currency.
Marumahoko said the group experienced declining demand with volumes reducing by 29% during the six months ended April 30.
He said commercial volumes in all divisions were low as most customers carried high stocks in a declining market.
The group’s exports to neighboring countries continued at lower margins. Its profit growth was below inflation, as the company could not review prices in relation to the exchange rate.
Marumahoko said the salary increases, which were awarded through arbitration and the National Employment Council (NEC), and the 400% increase in tariffs by the Zimbabwe Electricity Supply Authority (Zesa) had adversely affected profitability and cash flows.
“The salary increase of 140% on industrial minimums for the second quarter which cumulatively amounts to 764% for the last six months is well ahead of inflation of 505% but the situation is untenable and not sustainable for the company and printing industry as a whole,” he said.