Zimbabwe: ZWG Acceptance Still a Challenge - Hippo Valley

John Mushayavanhu, the governor of the Reserve Bank of Zimbabwe.

By Alois Vinga

LeadigG sugar producer, Hippo Valley Estates Limited (HVEL) has decried the mismatch between the obtaining ZWG exchange rate stability and the rejection of the unit across the markets.

The outcry comes on the back of stable exchange rates, which have maintained sanity since the September 2024 official devaluation of 43%. The two markets, official and parallel, have maintained a close range, hovering between ZWG28, 00 to a high of ZWG34, 00 against the greenback.

But presenting a trading update for the company's first quarter period, Hippo Valley said the local unit still faces acceptance challenges.

"While the ZWG currency has shown relative stability since the significant devaluation experienced at the end of September 2024, it faces significant challenges, particularly in gaining widespread acceptance.

"The tight liquidity conditions that prevailed during the quarter and the currency mix dilemma when trading using the ZWG currency resulted in episodes of excess ZWG cash balances for the company and USD working capital challenges, with most suppliers of goods and services, particularly the informal sector, continuing to favor the USD currency due to perceived stability," the company said.

The sugar producer said that despite the first quarter ending with relatively stable exchange rates, input costs were elevated due to inflationary pressures and geopolitical tensions as global trade policies shifted.

In terms of operations, the first quarter sugar production period ended on a positive note, marked by a 15% increase in cane supply from the company's plantations (miller-cum-planter), attributed to the higher milling crushing season.

Additionally, cane quality improved from an Estimated Recoverable Crystal of 11,30% to 11,46%.

"Despite some minimal mill start-up challenges, the plant had impressive recoveries, after achieving a cane sugar ratio of 8.49 against the prior year of 8.50 and the target of 8.75. Private cane deliveries marginally dropped due to diversions to the Triangle mill after the start-up challenges referred to above," the company added.

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