Cafca wants duty on aluminium scrapped

Cafca says the group is currently lobbying through various industry groups which they subscribe to, for the further scrapping of duty on aluminium cable.

Staff Writer

In the last national budget, Finance minister Tendai Biti reduced duty on the cable to 5% from 10%.

Cafca MD Rob Webster told shareholders at an annual general meeting last week the group would continue lobbying the ministry so that the duty be totally scrapped in order to give local manufacturers a competitive advantage.

Webster said currently the company imports the cable from Dubai.
Imports were still a threat particularly on the big orders as there were “hungry suppliers from South Africa” willing to supply at a discount, he said.

“To try and counter this we are working closely with the big users of cables. With the mines, we are putting in consignment stocks and offering them a package,” Webster said.

He, however, said he expects the threat to get worse towards election time as the current difficult environment gave local companies some barrier to competition.

“If we have a successful election and the country takes off, then the problem will become more significant,” Webster said.

However he said it would be an industry problem and not just restricted to cable.

Cafca chairperson Honour Mkushi said if the politics move in the right direction that may raise new dynamics as far as the business challenges are concerned. However, there were certain issues the group would maintain regardless of the country policy like the business with Zesa which is a win-win for all the parties.

Webster emphasised the superior technical cable from the group against the cheap inferior quality imported cable.

He said the competitive advantage was the ability to offer incredibly short lead times.

Webster also said the group had submitted an indigenisation plan to the National Indigenisation and Economic Empowerment Board and should be compliant in the next three to four months.

In the four months to January turnover grew 14% but profits were down because the group had sold more aluminum cables, which were low paying instead of the higher yielding copper cables.

Webster projected that by half year, the group would be down 10 to 15% on profits but should pick up by year end.

Exports were up 121% year-on-year while margins were down in the 10% region in South Africa, Malawi and Zambia in the 20s while the local market was down 25-30%.