Art Corporation generates approximately half of its foreign currency requirements, group chief executive officer Milton Macheka has said. This comes as most Zimbabwean companies are struggling to make foreign payments for their raw material requirements as well as pay for crucial equipment as the country battles with depleted nostro accounts.
Statistics from the Reserve Bank of Zimbabwe reveal that the country had a backlog of $600 million by September 2017, a position which has affected companies’ capacity to retool and bring in raw materials.
The payment backlog is a result of the country not being able to generate enough foreign currency to pay for imports whose bill between January and November 2017 amounted to $4,9 billion reflecting a trade deficit of $1,4 billion for the period.
To close the seemingly untenable gap, the Government, through the Reserve Bank of Zimbabwe (RBZ), has been rationing foreign currency through a priority list while at the same time restricting imports through SI 64.
The RBZ has also turned to the Afreximbank to get stabilisation facilities in an effort to smoothen the forex gap. To date such facilities have reached a cumulative $1,1 billion.
Despite this, not all companies have been able to access foreign currency requirements with some like Art Corporation looking towards the export market for relief.
“We continue to focus on export market development. With the current changes in the environment one of the biggest challenges that we face is the issue of foreign currency as a lot of our business depend on importation of key materials and spares and to this end the business has been working hard to develop the export market to ensure that we are self-sufficient,” said Macheka.
The focus on growing export revenues is meant to enable the importation of raw materials and settlement of foreign obligations.
Macheka told Business Weekly that the company was generating half of its foreign currency requirements from its exports into the region.
“Our monthly foreign currency requirements amounts to $1,4 million but we have been able to generate $700 000 from exporting batteries and pens among other products,” said Macheka.
Unlike other local companies, that are exporting at cost or below break-even just to get foreign currency, Art Corporation’s exports are competitive and profitable.
“We are making profits from our exports and we are very competitive,” Macheka said.
Macheka said the company’s products, which are distributed in Malawi, Mozambique, South Africa, Zambia as well as other African countries are now contributing approximately 18 percent of turnover.
In its last set of results, revenue increased by 13 percent to $33,5 million, but management is aiming higher with revenue expected to reach $39 million.