Monday , April 12 2021

Forex deficit Cripple cooking oil machine

Area Wilmar, the country's largest producer of cooking oil, says it is owed to its external suppliers of $ 22 million due to acute foreign currency barriers locally.

By the company's correspondent

The revelations were made during a recent tour of the company's Chitungwiza business by Finance Minister Mthuli Ncube, who would understand the challenges facing the manufacturing sector.

Area Wilmar is a joint venture between the Somani family, Wilmar International Ltd and the Government of Zimbabwe through Industrial Development Corporation. The company's flagship product is Pure Drop cooking oil.

The company processes soybeans and cotton seeds to extract oil, with the remaining high protein being used for rootstocks.

It employs 450 people who direct and indirectly engage at least 1,000 people in sales and distribution following.

At least 98% of the company's employees are from Chitungwiza.

Surface Wilmar CEO Sylvester Mangani told reporters after Ncube's tour that they struggled to get credit lines to import raw materials.

"What has happened is that we have had a good relationship with our suppliers for a while and we received good credits from them, but in the last six months we have not been able to service them," he said.

"If we do not pay back, the credibility will be lost.

"The company has failed to serve external loans due to lack of exchange rates.

"Our external debt now stands at $ 22 million and it attracts interest daily in the nostrons."

The company's capacity utilization for packaged cooking oil, soya flour and cotton flour is 26%, 8% and 11% respectively.

Mangani said that the low capacity utilization was due to the inaccessibility of inputs and lack of foreign currency.

He said that the company would soon start an agricultural program where at least 100,000 hectares of soybeans would be grown under irrigation in five years.

Mangani said the project would save the country $ 50 million in foreign currency annually.

But Mangani said the government's decision to lift a ban on imports of selected basic products was "a tooth in the teeth" for local industry.

"What we say is that the government has said that people can use their free resources to import food oil from South Africa, but we say we can deliver it cheaper," he said.

"These same free funds can then be channeled towards us so we import the raw materials to deliver locally."

Area Wilmar is the main investor in Olivine Industries with a share of 65% while the Zimbabwean government has a 35% share.

Olivine said foreign currency needed to buy modern equipment to improve its competitiveness.

Ncube said the government would support the modernization of Olivine to improve the value of its equity.

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