Forex scarcity derails Old Mutual project

CONSTRUCTION of Old Mutual’s US$21,4 million small-to-medium enterprises (SMEs) complex, which was initially set to be finalised during this year’s first half, will be delayed owing to the debilitating foreign currency crisis affecting the country, businessdigest has learnt.

By Tinashe Kairiza

The cost of the project, initially pegged at slightly over US$21 million, is also forecast to soar.

Zimbabwe abandoned its local dollar and adopted a basket of currencies in 2009 to arrest spiralling inflation, but local industries are currently struggling to access foreign currency to import key raw materials required to sustain operations.

The country’s bond note, introduced in 2016 to boost dwindling exports, is not trading at parity with the greenback, despite initial claims by the Reserve Bank that it would enjoy parity.

Addressing an analyst briefing last week, Old Mutual chief executive officer Jonas Mushosho told shareholders that an acute shortage of foreign currency besetting the economy would derail initial targets to finalise construction of the SMEs complex by 1H 2018.

“We have made good progress in the construction of the SMEs market located around Harare central market district. The construction of the market is expected by end of the first half of 2018.

“I do, however, want to mention that the risk remains that the timeline and cost of this project may be impacted by the shortage of forex,” he said, noting that the foreign currency crisis was also impacting on other key investment decisions by Old Mutual.

Key imported building material required to finalise construction of the vast complex include electrical accessories. The complex, which sits on 11 823 square metres of prime retail land, is touted to be the biggest one-stop shop market housing small-to-medium enterprises in sub-Saharan Africa.

On completion, Old Mutual will lease space to thousands of informal businesses operating in Zimbabwe.

Apart from providing 500 bays, the centre will also have accommodation facilities for traders coming outside of Harare, a supermarket and parking space. Close to 2 000 square metres of the complex will house storage and refrigeration facilities for fresh produce coming from areas outside Harare such as Murewa, Mutoko and Bindura.

Small-holder farmers incur significant huge post-harvest losses due to lack of proper storage facilities such as refrigerators.
It is estimated that 50% of perishables on pavements and other markets such as Mbare Musika go to waste as a result of poor storage facilities.

A footbridge will link the SMEs centre with the Eastgate Mall, another property owned by Old Mutual situated at the heart of the capital’s central business district.

The multinational company, with vast investment interests ranging from banking, micro-insurance, asset management to retail also intends to construct solar power plants in the country.