RBZ’s tight monetary policy stance put squeeze on CAFCA volumes
BUSINESS REPORTER
Listed cable manufacturer CAFCA says the Reserve Bank of Zimbabwe (RBZ)’s restrictive monetary policy stance has suppressed its local trading volumes in the quarter to June 30, 2023.
In a trading update, CAFCA company secretary Caroline Kangara said local volumes went down 6% .
She said conductors sold declined to 659 tonnes in the period under review from 680 tonnes sold in the prior comparative period.
Year-to-date, CAFCA sold 1799 tonnes, down from 1879 tonnes, sold in 2022.
“Local volumes for the quarter were 6% down on the same quarter last year with the largest drop being in the Utilities sector but a marked drop in all the other sectors towards the end of the quarter due to the tight Zimbabwe dollar monetary policy,” Kangara said.
Owing to tight liquidity challenges, Kangara said CAFCA sold the majority of its goods in United States dollars in the period under review, a move which negatively impacted the volumes due to reduced aggregate demand.
The shift to United States dollar sales comes after the authorities have tightened liquidity in the market to arrest inflation and local currency depreciation.
“We have seen, with the Zimbabwe dollar tightly controlled in the market, a shift in our United States dollar sales to 85% of turnover thus ensuring adequate foreign currency for our import needs,” company secretary Caroline Kangara said in a statement accompanying the company’s third quarter trading update ended June 30, 2023.
The company lost some production days in April due to stockouts of copper cathode, while the non-availability of foreign currency in the economy was a major concern to the company.
She said the last quarter of the financial year outlook was mixed with the tight monetary policy impacting negatively on volumes whilst the large project orders the company has in the mining sector were improving volumes to ensure it has a good quarter.
The turnover in the period under review,however, increased to ZWL$37.4bn from ZWL$3.3bn .
Kangara said export volumes were 106 tonnes in the current quarter versus the same quarter last year of 91 tonnes.
The customers in Malawi continue to experience difficulty in obtaining foreign currency so stock replacement there is slow with Mozambique, Rwanda and Tanzania sales being in line with forecast.
CAFCA manufactures and supplies cables for transmission and distribution of energy and information; it has its primary listing on the Zimbabwe Stock Exchange and its secondary listing on the Johannesburg Stock Exchange.
