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Top sugar producer halts operations

Companies in Zimbabwe are struggling for survival following the introduction of 19-hour daily power cuts.

One of the country’s largest sugar producers, starafrica corporation, says they have not been operating since July 5 because of load-shedding.

The company’s CEO Regis Mutyiri (RM) told our correspondent Thomas Mupfuka (TM) in an interview that the listed firm had so far incurred $32 million in losses due to the power cuts.

Below are the excerpts from the interview.

TM: How much are you losing due to the current erratic power supply and to what extent are the power shortages impacting on your operations?

RM: The company has not been operating since July 5, 2019 due to acute load-shedding of over 14 hours daily.

As a consequence, revenue losses of over $32 million have been incurred during the month of July 2019 alone.

The situation is not sustainable and the company has intensified negotiations with the utility for a ring-fenced power supply arrangement.

Such a facility will come with a special ring-fenced tariff, which will increase the prices of our products and make our products less and less competitive.

TM: Tell us about the general performance of starafrica corporation?

RM: In the 2018 financial year the company exported 1 950 tonnes of granulated bottler grade sugar Botswana and embarked on extensive scouting for export business in the region and Central Africa.

These efforts are beginning to pay off as several export enquiries have now been received to enable the organisation to prepare an ambitious five-year export plan to enhance foreign currency earnings.

TM: How far have you gone towards entering these new markets? Would also like to find out the exact countries you are targeting besides the Botswana market?

RM: We have now sold into the Democratic Republic of Congo [DRC] and following this initial breakthrough, there is an increasing number of enquiries and potential customers.

We are confident to grow this market substantially.

We have also received enquiries from Kenya and indications are that sales will materialise once the country-specific regulatory requirements are met by the potential customers.

Exports are ongoing into South Africa and we are now looking into increasing the number of customers in this market.

We have also received tangible enquiries from the Zambian market for our sugar speciality range [icing, castor, syrups, honey, caramel etc].

TM: Would also like to find out, which products will you be exporting?

RM: The graph in section 7.0 indicates the planned exports of granulated sugar [under GSSH] and sugar specialities [under CCF] to the relevant market destinations.

TM: What are the advantages of entering these markets?

RM: Business growth and foreign currency earnings to the benefit of the company and country.

We continue to increase our brand footprint in the region and ensuring employment opportunities in the country.

TM: What challenges are you currently facing in your quest to enter these markets?

RM: Pricing competiveness remains a key challenge. Cost of moving goods to identified destinations can be very high.

For example, the two-stage transhipment process [Harare to Mombasa Port in Kenya] entails use of both road and sea freight adding over 25% on ex-works prices.

Transport to Namibia is also prohibitive. Risk of unknown markets raises delays in payment issues and there is restricted circulation.

TM: What is your five-year export plan?

As can be seen below, we anticipate progressive annual growth in export volumes of between 30 and 44% up to 2022.

This anticipated growth is driven by increasing confidence as we penetrate more and more and intensify our engagements in the region.

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