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United Refineries turns to toll manufacturing

09 Nov, 2018 - 00:11 0 Views

eBusiness Weekly

Kudzanai Sharara
Faced with the prospect of competition from imported products, Bulawayo-based fast moving consumer goods manufacturer, United Refineries Ltd (URL), has turned to toll manufacturing in an effort to maintain product throughput.

Government recently suspended Statutory Instrument (SI) 122 of 2017, a move it said was necessary to protect consumers, as well as give manufacturers time to restock for the festive season and beyond.

The amendment allows companies and individuals with free funds to import commodities that include animal oils and fats, baked beans, body creams, bottled water, cement, cereals, cheese, coffee creamers, cooking oil, crude soya bean oil, fertiliser, finished steel roofing sheets, wheat flour and ice cream.

While the suspension was said to be a temporary measure, Industry and Commerce Minister Mangaliso Ndlovu, reportedly said price hikes and product shortages had forced Government to confront the sustainability of protectionism.

“Before we talk of the conditions, it has to be discussed how sustainable it is,” he said.

“We need to give ourselves clear targets to say how do we retool, how we can modernise as industry, so that we are also able to compete.

“Because we may have the comfort of the domestic market, but we also have to compete on the global market, we also have to consider exporting.

“If we are not confronting issues of competitiveness, it means we may be lagging behind for a while to

come.”

Some manufacturers, however, said they have the competitive capacity and the only constrain is the availability of foreign currency to bring in raw materials.

United Refineries Ltd (URL), managing director Busisa Moyo, is on record saying his company has the capacity to produce products at competitive prices that can match imported ones.

But with the borders having been opened, his company is seeing an opportunity, promising those with free funds that they can have their products toll manufactured locally instead of importing finished products.

“Interested parties with free funds can approach us and we can quote them a processing fee for whatever product they would like to produce and the quantities,” said Moyo in response to Business Weekly.

“We will put you in touch with our suppliers of raw materials in South Africa, Namibia, Malawi and other source countries and facilitate importation,” he said.

Moyo said if given an order, URL will give a processing lead time to delivery of between three and four weeks.

He insisted that by choosing the toll manufacturing route, those with free funds can get products cheaper than if they were to import.

“At higher throughput we expect lower prices per unit, but also raw materials are duty free so we should be cheaper in US dollars,” said Moyo who said the processing fees can also be in rands.

Our capacity utilisation will increase and the free fund investor will get a margin for his product when he/she sells to the final consumer and for those customers who want to start their

own brand it will be of great value, he added.

He said it was, however, not necessary for those interested to come up with new brands as, URL already has plenty of registered cooking oil brands, namely ROIL (100 percent soya), Sunshine (100 percent sunflower), HoneyGold (blend).

“It’s throughput we are after, the finished product will be 100 percent under your control and on your terms,” Moyo communicated on this twitter  account.

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