March 20, 2019

Last standing cooking oil manufacturer suspends operations

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THE obtaining foreign currency crisis and difficult business operating environment have claimed the scalp of cooking oil manufacturer Surface Wilmar who announced Friday they are suspending operations.

The company, which owns the Pure Drop brand, reportedly owes foreign raw material suppliers over US$11 million and has failed to access enough foreign currency from the Reserve Bank of Zimbabwe over the past five months.

The move is not insignificant as Surface Wilmar is the biggest cooking oil manufacturer in Zimbabwe.

Another manufacturer, United Refineries Limited which makes the Roil brand of cooking oil, has of late been concentrating more on soap-making.

A few weeks ago, Surface Wilmar put out a now-ironic statement committing to continue selling its 2L bottle at a depressed Z$3.70 (US$1.02) on the strength of Reserve Bank subsidies that have been widely condemned by economists as unsustainable.

“Please be advised that our price for cooking oil has not changed and the current shortages are being worsened by speculators bent on profiteering,” the statement inserted in major newspapers read.

“Our factory has more than enough capacity to meet the national demand for cooking oil. We are engaging the RBZ for foreign currency to allow us to import crude oil and packaging material to ensure we keep the market supplied.”

The Confederation of Zimbabwe Industries yesterday warned government that a law introduced under the Presidential Powers (Temporary Measures) Act, which criminalises trading in foreign currency with up to ten years imprisonment, risked collapsing industry as the law prevented business from accessing foreign currency on the parallel market.

The government is struggling under the weight of unsustainable subsidies to fuel, grain and other basic commodities as it continues to insist that its surrogate Bond Note and RTGS currencies are at par in value with the United States dollar.

The actual market rate is discounted by up to 260% with RTGS$3.60 buying just US$1.

The currency dispute is seen affecting investment after S&P Dow Jones in December removed Zimbabwean domiciled companies from its indices citing forex shortages.

While companies listed on the Zimbabwe Stock Exchange continue to report RTGS figures as United States dollars in compliance with government policy, the actual value is close to four times less.

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