THE sugar price increase awarded recently has seen a marked reduction in illegal exports, says Zimbabwe Sugar Refineries Corporation Ltd (ZSR) chief executive officer Patison Sithole.
Sithole told businessdigest in an interview that the new Reserve Bank of Zimbabwe (RBZ) foreign currency auction system had also “drastically changed” the company’s operations.
Unscrupulous individuals including top business executives have been buying sugar from wholesalers at the official price in bulk and then later reselling it on the parallel market at exorbitant prices.
The racket also included sugar exports to neighbouring countries such as Zambia, Malawi and Mozambique where the commodity is scarce or expensive.
“We have seen a marked reduction in illegal exports of sugar following an increase in the price of sugar on the domestic market in January,” Sithole said. “The new auction rate of exchange has also made such exports unviable.”
While the Zimbabwe dollar was officially pegged at $824 against the United States dollar it was going for as much as $7 000 on the parallel market, making it lucrative for those selling sugar in foreign currency beyond the country’s borders.
The auction rate is currently swaying between $3 600 and $3 900 at the RBZ.
Sithole said ZSR was currently exporting to Botswana and Namibia – its traditional markets.
“Our annual sales are Namibia, 15 000 tonnes and Botswana, 18 000 tonnes,” he said.
The chief executive said while it was still too early to assess the impact of the Reserve Bank of Zimbabwe’s new Monetary Policy Statement on business his company had witnessed some reduction in the cost of imported raw materials in their tyre business and engineering firm.
He said problems being faced in the sugar business related to recent cost increases.
“The National Railways of Zimbabwe increased their rates in January by 150% in respect of raw sugar movement and 100% in respect of coal,” Sithole said. “In addition, the Zimbabwe Electricity Supply Authority advised us of increases in excess of 400%. Due to prevailing market conditions our company has had to absorb these increases.”
He said in terms of sugar stocks, there had been a marked improvement in local stocks.
“Our suppliers of raw sugar have also assured us of adequate stocks for the foreseeable future,” Sithole told businessdigest.