Proplastics slams tight policy inducing ZWG scarcity
By Alois Vinga
LISTED pipes and fittings manufacturers, Proplastics Limited, have blamed the implementation of tight Monetary Policy for ZWG shortages, which have hit the business flows.
While credited for relative exchange rate stability, which has seen exchange rates hovering between ZWG26 to ZWG32, experts believe the current stability is stage-managed and risks going haywire in the event of the Treasury removing the tight grip on money supply.
Echoing similar sentiments this week, despite a promising start to the quarter, the environment remains constrained by liquidity issues, low economic activity and increasing power disruptions.
“The tight monetary policy measures currently in place have resulted in the scarcity of the local currency, with the resulting slowing in Government projects. Whilst the exchange rate and inflation have been brought under control, the availability of ZWG remains limited, thereby negatively impacting potential revenue streams,” the company said.
Proplastics said the increase in the foreign currency surrender requirement from 25% to 30% for exports has not only eroded the competitiveness of our exports but has also negatively impacted overall market positioning and exporting viability.
Revenue for the first quarter was primarily received in US$, with US$ payments dominating transactions throughout the period.
In the current quarter, the formal market, particularly the retail sector, the company made appeals for a reduction in the cost of doing business and the removal of informal sector advantages.
Despite the prevailing liquidity issues, the quarterly sales volumes grew by 11% over the prior period. Revenue grew by 3% to US$4,263 million against US$4,123 million achieved in the prior period, without any export contribution recorded in the current quarter.
Production volumes also increased by 11% against the previous period, as the business cleared supply backlogs and replenished stocks for high-demand products. The raw material supply remained consistent throughout the quarter.
