THE Zimbabwe Independent business reporter Nqobile Bhebhe (NB) this week caught up with Zimplow CEO Zondi Kumwenda (ZK) in Bulawayo, who spoke of his plans for the company. Excerpts:
NB: In brief, how has the trading environment been since January?
ZK: The last quarter to June was flat… but generally the cost of doing business in this country is still too high, pushed by the ever increasing international steel prices and labour costs. For instance, in Zimbabwe the minimum wage is far too high as compared to the region.
NB: Explain further…
ZK: In Zambia the minimum wage is US$87 per month while here it’s US$180, so you can employ two people in Zambia for the price of one in Zimbabwe.
NB: Zimplow products seem to be well spread in the region; are you still competitive?
ZK: We are facing a new challenge in the region and it is that of brand infringement. Some companies are importing products of inferior quality and claim that the products are genuinely Zimplow’s.
We are also competing against the Far East (India, China) whose exports carry huge export incentives of up to 25%, whereas there are no export incentives on Zimbabwe exports.
NB: How are you tackling it?
ZK: The brand infringement is a serious issue… we have taken legal advice from our lawyers. The brands are legally registered so no one has the right to sell the products under our trade mark.
NB: Are you hoping for a break through?
NB: But in terms of the local market, how is the demand for the products?
ZK: The cotton selling season kicked off late due to a standoff between farmers and buyers, so there has been little movement on our products, especially spares. We are ahead of last year on implements volume sales though.
NB: Your line of business is very much linked to steel and you indicated that international prices are ever rising, how is this impacting on business?
ZK: I firmly believe that the key to all steel users in Zimbabwe is the revival of Ziscosteel. We should get it up and running soon. If the issue drags on for too long I foresee many companies that depend on steel folding and that has a negative bearing on the economy.
NB: So how are you coping in such an environment?
ZK: We rely on imports from South Africa and that is not an ideal situation. Generally steel can only move in one direction. Importing steel from South Africa and re-exporting the same as finished product adds another 30-40% on the cost of the product and that kills every competitive advantage available.
NB: There is a perception that the business environment is on the mend, what’s your take?
ZK: To a certain extent it is, but utilities are still expensive. For instance telephone bill charges are too high and even municipal rates. But I must say that we have not been affected by power cuts here. We have a standby generator that can power the whole plant which we have rarely used, but generators are expensive to run.
NB: And your sentiments on multiple currency use?
ZK: Well the positives are that one can have a proper business budget, can easily forecast ahead… but the downside is that of lack of proper hedging instruments in the economy, especially for us as exporters.
NB: Are you managing to access loans from banks?
ZK: Zimplow has a good track record with Afreximbank based in Cairo, so we do access loans on an annual basis, at rates of around 12% per annum (all costs included). As of now, the business has no gearing.
NB: You were appointed CEO in July last year, what’s your vision for Zimplow?
ZK: Well, the vision for Zimplow is simple. We need to dominate the local and regional markets. By 2020 we should be more visible in the whole of Sub-Saharan market. We have a strong dedicated team for the task. We also pride ourselves with the strength of our brand.