Depreciating regional currencies hit Afdis

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DEPRECIATING currencies in Zambia, Malawi and Mozambique have affected African Distillers (Afdis) export initiatives into the region, managing director Cecil Gombera has said.

BY TARISAI MANDIZHA

Afdis began exporting to Malawi last year and the company said it had plans to venture into Zambia and Mozambique.

“We exported two containers just before Christmas, but because of the Malawian kwacha, prices are declining against the United States dollar, due to the strengthening of United States dollar, we are now slowing down on our exports,” Gombera said.

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He said the depreciation of the currencies for the distiller’s export destinations also makes the product costlier.

“Currently, the depreciation of the Malawian kwacha against the United States dollar becomes uncompetitive for players. It’s the same if we export into Malawi were currencies have depreciated against the dollar, we land the products a lot more costly,” Gombera said.

He, however, said Afdis plans to venture into Zambia and Mozambique once their currencies stabilise.

Afdis recorded an improved overall volume performance ahead of prior year in the four months of the 2015/2016 financial year driven by the growing demand for ciders and wine.Afdis has a June 30 financial year ending.

Ciders grew by 56% on prior year, while the spirit business was up 8% above prior year and contributing 58% of total Afdis volumes.

The spirit business in 2015 contributed 58% of total Afdis volumes, but has experienced severe challenges under the current financial year.

2 COMMENTS

  1. It looks like Zimbabwe is caught between a rock and a hard place! Zimbabwe has no control over the depreciating regional currencies while at the same time has no control over the strengthening of the USD. The strengthening of the USD and weakening of the regional currencies is hurting Zimbabwe exports and Tourism. The challenge is how does Zimbabwe respond to this exchange rate problem. Zimbabwe has no money to subsidise exports and needs forex from exports and tourism. What is the answer to this question in the medium to long term?

    • Mr Economist its simple to navigate your way past this challenge of strengthening of the US dollar. You simply need to lower your prices and maintain your clients and then insist that your suppliers adjust their prices too, if they refuse honestly that’s a good reason to approach authorities to seek permission to import cheaper alternative. Econet Wireless did it and it worked well for them but because most of our half baked managers think that prices should never face southwards at times they often find themselves stuck with their merchandise. Most of these value added goods exporting companies use imported raw materials to manufacture their products, which imports they would have purchased at devalued prices but expect to export at revalued prices to the same markets, that is ridiculous. Any business that resists price/rates/charges reduction during these days of ‘strengthening green backs’ deserve immediate management changes. There are fifteen (15) listed companies currently in desperate need of management changes if they are to survive obtaining market conditions.

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