The recent 43% overnight devaluation of Zimbabwe’s local currency has sent shockwaves throughout the economy, with businesses struggling to cope with increased costs and reduced profitability.
Less than six months after Zimbabwe launched yet another new currency, the Zimbabwe Gold (ZiG), the country was forced to devalue it as inflationary pressures were taking a toll on the struggling economy.
The value of the gold-backed currency that was launched in April this year was slashed by more than 43 percent by authorities in September.
Victoria Falls Stock Exchange listed leading conglomerate Innscor Africa Limited, reported that the devaluation significantly impacted its operations, particularly in the protein segment, which relies heavily on formal retail channels.
“The overnight devaluation of the local currency late in the quarter under review introduced further challenges into the operating environment,” Innscor Africa Limited stated in its trading update for the first quarter ended September 30, 2024.
The devaluation exacerbated existing cost-push pressures stemming from adjustments to Value Added Tax (VAT) status on basic products and Sugar Excise Duty in beverage categories.
Additionally, sustained pricing distortions in formal retail channels and route-to-market regulations have added to the challenging business environment.
“The Group’s management teams continue to deploy focus toward navigating the complex policy landscape, and most notably, the cost-push pressure emanating from the adjustment to the Value Added Tax (‘VAT’) status on many basic products which the Group manufactures, coupled with the Sugar Excise Duty in the beverage categories; sustained pricing distortions in the formal retail channel and the considerable route- to-market regulations have also added to the dynamic.
“The Group continues to engage with the relevant Authorities in an effort to achieve sustainable, long-term solutions with regards to pricing, and the impact of the changes emanating from the revised VAT regulations,” the company said.
Despite these headwinds, Innscor Africa Limited reported solid volume growth in its Mill-Bake, Beverage, and Packaging segments, driven by extensive investment programs and focus on product pricing.
National Foods registered a 20% aggregate volume growth, driven by newly introduced FMCG product categories. The Flour division saw a 12% volume growth, while the Maize division recorded an 82% volume improvement.
Irvine’s Table Egg division delivered 17% volume growth, driven by expansion investments and strong consumer demand. However, the Day-Old chick division saw a 7% contraction due to drought conditions and VAT implications.
Colcom’s aggregate volumes remained steady, with the fresh pork category growing 3%, but processed lines declining 8% due to intermittent trade with the formal retail sector.
Associated Meat Packers Group (AMP) maintained protein volumes at comparable levels, with the beef category growing 32% and the chicken category contracting 17%.
Natpak posted a 13% overall volume growth, with all divisions registering growth. Prodairy’s volumes grew 26%, driven by dairy blend and maheu product categories.
Probottlers’ volumes increased 20%, with “Fizzi” carbonated soft drink category growing 5%. The Buffalo Brewing Company’s (TBBC) sorghum beer offering saw solid volume performance.
Nutrimaster’s volumes closed 3% below the comparative quarter due to timing differences in the summer agricultural season. Profeeds registered an 8% reduction in overall stockfeed volumes following the silo collapse in November 2023.
Probrands maintained volumes at consistent levels despite constrained global rice supplies. The company achieved significant growth in specialized condiment and household product categories.
