23 November 2017

Zimbabwe: Scramble to Save Sanitary Wear Firm

EXECUTIVES at one of the country's largest sanitary pad producers, which could close within a week without emergency intervention, were last week making frantic efforts to press the Ministry of Finance and Economic Development to facilitate the release of foreign currency for raw material imports.

Onsdale Enterprises, a major sanitary wear producer which employs 140 people, announced last month that it was on the verge of shutting down after the foreign currency crisis deteriorated.

The firm manufactures the Farai brand of sanitary pads.

Sales and marketing manager, Paddington Mupfururirwa, told The Financial Gazette last week that the firm had taken the unprecedented move to mothball three of its four sanitary pad production lines in Harare as raw material shortages continued to cripple operations.

Political upheavals in the country last week, which deteriorated after the Zimbabwe Defence Forces moved to take over government, had led to delays in finalising the foreign currency release, according to Onsdale.

This was after the Ministry of Finance had made strong commitments to address the firm's problems, which could affect millions, if production is not restored.

Mupfururirwa said the situation had remained the same since his announcement in October.

But he said the firm had been left with only one week's production.

It means production could stop in the coming week.

"The situation has not changed," Mupfururirwa said.

"We can't blame anyone because the Ministry of Finance had shown commitment, but events in the past week slowed the process because ministries are only being manned by juniors. They want to make sure that we get everything that we need in terms of raw materials. They felt that sanitary pads were not getting the attention that they deserve. But we are very hopeful that by next week if the situation opens up we will be able to approach people," said Mupfururirwa, referring to the political turmoil.

Company closures continue to drive Zimbabwe's unemployment rate, estimated by independent economists to be over 90 percent.

A Confederation of Zimbabwe Industries manufacturing sector survey published last month, in partnership with The Financial Gazette, showed that about 30 percent of firms in the sector were on the brink of collapse mainly due to the foreign currency crunch.

Onsdale, which also makes the Farai brand of toilet paper, among other comfort products, was set up in 2004 after a US$2,3 million investment.

The industry imports as much as 75 percent of its raw materials.

"We are going to close, we are left with only three weeks' supply of raw materials," Mupfururirwa, told reporters on the sidelines of an exporters' conference held in Harare last month.

"We have to close, there is no way out. We will let people go home and return when the situation improves. It is a sad situation."

Zimbabwe's foreign currency crisis intensified in the first half of 2016, the culmination of a yawning current account gap caused by a collapse in local production as well as weak commodity prices for the primary resource-dominated economy.

The country has racked up a cumulative US$20 billion trade deficit since dollarisation in 2009.

The manufacturing sector, whose contribution to exports has declined from 29 percent in 2013 to 15 percent last year, is among the most affected by the foreign currency shortage.



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