Starafricacorporation feels the heat from sugar tax

SAMANTHA MADE

Starafricacorporation is ramping up pressure on policymakers to revise the country’s sugar tax regime, as the levy continues to choke industrial demand and erode profitability—particularly within the beverage sector, which has been hit hardest by the policy.

Bpard chairman Rungamo Mbire said the company will continue to advocate for reforms through the Zimbabwe Sugar Association, while cautiously welcoming government’s recent move to impose a 30% surtax on imported white sugar—a protective measure aimed at shielding local producers from regional dumping.

“While the sugar tax remains a headwind, we will continue to advocate, through the Zimbabwe Sugar Association, for policy refinements that support the local industry,” Mbire said. “We are also hopeful that the recent inclusion of white sugar on the list of products attracting a 30% surtax will provide necessary protection against the dumping of sugar by regional producers.”

Despite the regulatory drag, Starafricacorporation managed to post growth in both sales and volumes, buoyed by improved productivity, streamlined operations, and a strategic pricing model that made the company more competitive against imports.

“Our sugar refining operation recorded a 7% growth in sales volumes, with granulated white sugar sales increasing to 59,613 tonnes. This performance is particularly encouraging given the subdued trading environment in the latter half of the year,” Mbire said.

Still, the impact of the sugar tax has been severe. Mbire revealed that demand from industrial clients, particularly beverage manufacturers, remains depressed as they absorb the financial strain imposed by the levy.

“While we reduced prices to be competitive against imports and anticipate realising the benefit in the upcoming year, demand for industrial sugar in general is weak, as some of our key customers in the beverage sector suffered from the negative effects of the Added Sugar on Beverages Tax,” he said.

Goldstar Sugars (GSS), the group’s flagship refining operation, maintained a steady supply of raw materials throughout the reporting period. Production was carefully managed to match market demand, ensuring optimal use of working capital.

“Throughout the period, GSS enjoyed an ample supply of raw materials and strategically managed production in line with demand to optimise working capital. We are confident in our capacity to scale up production to meet anticipated future market demand,” Mbire said.

Looking forward, Starafrica is sharpening its focus on innovation, product diversification, and efficiency as it seeks to expand market share and stimulate local demand for its premium sugar products.

“Our goal is to expand our market reach, offer competitive pricing to our customers, and increase the local consumption of our premium white sugar and specialty products,” Mbire said. “Through continuous innovation and a commitment to operational excellence, we are confident in our ability to drive long-term sustainable growth.”

He also pointed to macroeconomic tailwinds that could aid the company’s outlook in the coming year. With relative currency stability and an improved agricultural season, conditions are expected to bolster food security and spur demand.

“We are encouraged by the macroeconomic stability that emerged in the latter half of the year. This, combined with a favourable agricultural season, is expected to improve national food security and stimulate economic activity,” Mbire noted.

He added that a projected record tobacco harvest and firming international prices are likely to strengthen foreign currency inflows, which could help support the local currency and ease input costs for manufacturers.

As Starafricacorporation navigates an increasingly complex regulatory and economic environment, its call for urgent policy recalibration underscores the delicate balance between taxation and industrial growth.