The Sunday Mail
The lifting of restrictions on imports will ease shortages of key foodstuffs and other commodities, but some local manufacturers might take a hit.
Publicly traded makers of consumer goods such as National Foods, Hippo Valley, Star Africa, Lafarge and Dairibord are forecast to see a drop in sales volumes and earnings.
Indications on the Zimbabwe Stock Exchange (ZSE) are also suggesting that retail stocks like OK Zimbabwe might be negatively affected.
Imported items such as cooking oil and flour often retail cheaper compared to locally manufactured goods.
Products that can now be imported include cement, bottled water, packaging material, pizza base, animal fat, cooking oil, agro chemicals, stockfeed, cereals, fertilisers, wheat flour and ice cream after the suspension of Statutory Instrument 122 of 2017.
This move allows those with offshore and free funds to import basic commodities that have been in short supply.
Now, local industry will have to adjust to the competition from imports, usually priced cheaper than locally produced goods.
Analysts say the move, although welcome to avert shortages on the market, will have far reaching consequences to local industry, which was beginning to recover from years of battling low competitiveness, depressed demand and low capacity utilisation.
On the ZSE, shares largely remained depressed as all market indicators closed the week pointing southwards.
Total market capitalisation let go of 3,9 percent to close the week pegged at US$19,028 billion from prior week’s US$19,779 billion.
The primary indicator, the ZSE All Share Index, lost 2,5 percent to 174,07 points on waning demand.
At 584,72 points, the Industrials Index retreated 2,4 percent to settle at 584,72 points while the Mining Index fell the heaviest with a 5 percent decline to 216,96 points.
The market’s elite club, the ZSE Top 10 Index, let go of 4 percent to 181,29 points on bartering of top cap counters.
Consumer stocks traded mixed in the week with gains recorded in sugar processor, Hippo, that put on a hefty 16 percent to close at US$2,80.
The sugar making company has earlier indicated it benefitted immensely from the import restrictions, which resulted in increased volumes on the back of rising local demand.
Dairibord added 1,1 percent to 21,22 cents while largest retail group, OK Zimbabwe, put on a marginal 0,9 percent to 33,55 cents.
Cement producer, Lafarge, remained flat at US$1,53 cents.
Agro-processing group, National Foods, lost 1,5 percent to US$640 from the previous week’s US$6,50.
The manufacturing giant is expected to feel the pinch from the suspension of the import ban which will expose it to more competition to its flour and cooking oil market where the company has a significant share.
During the week, the market’s biggest company by market capitalisation, Econet, suffered a 12,8 percent decline to US$2,18 while beverages giant, Delta, retreated 2,2 percent to US$3,38.
The restrictive policy measures were introduced in 2016, then (SI 64 of 2016), to protect local industry from unfair competition from imports. This was also meant to boost consumption of local products and enhance job creation across value chains.
Local companies have been gaining traction with improvements in production and capacity utilization recorded during the period the statutory instrument was in place.
However, for the past couple of weeks, there has been significant shortages of basic commodities triggered by panic buying and speculative behaviour.
