Rising inflation, currency volatility poses threat

RYAN CHIGOCHE

Zimbabwe Stock Exchange listed construction firm, Masimba Holdings, says rising inflation and currency volatility  poses a  threat to  the sustainability of infrastructure and  long term projects.

In the month of April, annual  inflation rose to 96.4% from 72.7% in March.

The  value of the Zimbabwe dollar continues to plunge. At the foreign currency auction system,  the Zimbabwe dollar  was  this week trading at ZWL$258: US$1, while the local dollar was trading at ZWL$286: US$1 on  the interbank market.

However, the Zimbabwe dollar was trading  at  ZWL$450: US$1 on the parallel market.

“…These exchange rate disparities have resulted in pricing challenges in the marketplace, hence further accelerating inflationary pressures. The worsening inflation threatens the viability and sustainability of long-term infrastructure development projects, given its impact on United States Dollar denominated materials pricing,’’ Masimba Holdings company secretary, Pearl Mutiti said.

In its trading update for the quarter to March 31, 2022,  turnover for Masimba Holdings  grew  19%, driven by a strong and firm order book.

Profitability in the period also remained stable as it was supported by a hedged financial position.

“ The group has a firm order book, the execution of which may be negatively impacted by the prevailing volatility in the current macro environment. In addition, the continued  Russia- Ukraine conflict has affected supply chains and pricing of key construction materials such as steel, fuel and bituminous products,’’ Mutiti said.

Last year , Masimba  said its order book increased by 200%, largely due to increased private and government infrastructure projects.

Capital expenditure for the group amounted to ZWL$382m in the period under review from  ZWL$43m incurred in the prior comparable period.

Masimba, however, said  it will remain focused on its value preservation strategy that is anchored on resource optimisation, product, and market diversification, despite worsening economic conditions.