Reserve Bank of Zimbabwe (RBZ) auction trade system could not end foreign exchange shortages in the country according to the Nampak Zimbabwe Limited in the Trading Update for the Year Ended 30 September 2020.
The central bank adopted the auction system expecting to bring transparency and efficiency in the trading of foreign currency in the Zimbabwean economy.
But Nampak, Group Managing Director, J. P. Van Gend says the foreign exchange shortage remained the Group’s main concern, especially in respect of paper for conversion into corrugated boxes for the commercial and tobacco sectors.
“Foreign exchange shortages were alleviated to a large extent, by the introduction of the foreign exchange auction system where the official exchange rate between the US dollar and the Zimbabwe dollar has stabilised at about ZWL$81 to USD1,” Van Gend says.
“Despite this, the allocated foreign exchange is insufficient to meet all the imported raw material requirements needed to facilitate efficient production schedules.”
Nampak a sales decline in the printing and converting segment, including Hunyani Paper and Packaging, Mega Pak and also CarnaudMetalbox according to the group’s latest trading update.
Hunyani Paper and Packaging sales volumes for the full year declined by 28% compared to prior year.
The Mega Pak full-year sales volumes declined by 12% against prior year mainly due to constrained consumer demand in the preforms market, in the first half of the year according to the Group Managing Director.
On CarnaudaMetalbox, Van Gand says, “The sales volumes for the full year declined by 34% compared to the prior year. The shortage of foreign exchange and reduced disposable incomes in the first half of the year impacted demand.”
Despite challenges faced, Nampak remains confident of continuing sustainability.
“The economy is likely to continue feeling the effects of the Covid-19 virus, but with the controls currently in operation, it is hoped that these will be minimised,” Van Gend says.