20 October 2018

Zimbabwe: Bakers in Financial Dire Straits - Warn That Bread Shortages Could Worsen

THE National Bakers Association of Zimbabwe (NBAZ) has revealed that the sector is experiencing serious shortages of raw materials due to the current foreign currency crunch and warned that the current bread scarcity could worsen.

Speaking to NewZimbabwe.com Business NBAZ president, Ngoni Mazango said that the central bank is not availing the required forex.

"We desperately need USD$7 million per month to service our machinery and import other non-wheat raw materials which are critical in the production of our products," he said.

"However, given the worst-case scenario even if we get USD$4 million we should be able to meet our demands.

"Unfortunately, Reserve Bank of Zimbabwe has not been meeting these demands and this is threatening the existence of the baking sector."

Mazango pointed out that most of the machines being used in the sector have been wearing out hence the urgent need to import the spares and he highlighted that the current bread prices cannot offset such expenses.

"We are currently producing bread at a cost USD$1 which is being exchanged at a rate of $3 against the bond notes but, at the end of the day, we are selling the product at $1.10 in bond notes value.

"Hence the loss we are incurring is very severe and if the central bank does not urgently interfere most players will be pushed out of business."

The bakers' association boss pointed out that in 2017, over 100 bakers folded operations and that just between January and July this year 12 more bakers have been pushed out of business.

Apart from maintenance costs, the country is already burdened with forex demand for the importation of wheat which requires USD$ 20 million per month.

Last month the Grain Millers Association revealed that they were owing suppliers USD$80 million which is attracting a penalty interest of USD$400,000 monthly.

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