ZIMBABWE – Cooking oil producers in Zimbabwe have said that they are struggling to access foreign currency from the Reserve Bank of Zimbabwe (RBZ) and the interbank market need to import key raw materials for their operations.
According to a Herald report, this follows the 2019 Monetary Policy where the Reserve Bank of Zimbabwe indicated that manufacturers would get forex through letters of credit (LCs) or facilities guaranteed by the African Export and Import Bank.
The processors said they had written to the RBZ, through the Oil Producers Association of Zimbabwe, seeking clarification on a number of issues, including the exchange rate at which they should get the forex.
The cooking oil producers indicated that some of their members had already run out of key raw materials, making it impossible for them to produce one of the important items in the food basket.
Banks are said to require cash deposits upfront, at the going market exchange rate, to match the amount of foreign currency cooking oil manufacturers may seek to buy from the interbank market.
Indications are that if importers are to get forex on the interbank they will be compelled to fork out huge sums of Real Time Gross Settlement (RTGS) dollars given that they will need to buy hard currency at the market rate instead of the previous 1 to 1 allocations by the RBZ.
The country currently requires an estimated US$250 million for importation of crude oil and soya bean imports annually, which translates to a monthly budget of US$20 million for the entire industry.
Zimbabwe needs about 2 million litres annually with local producers having the capacity to meet 95 percent of domestic consumption.
However, the processors faces intermittent shortages due to foreign currency challenges in addition to the country’s import bill which continues to outstrip forex inflows.
Olivine Industries acting chief executive Sylvester Mangani said that that there lacks sufficient forex currency for the importation critical raw materials such as soya beans, crude soya bean oil and palm fats to service the industry.
“There is nothing trading on the interbank market, we are yet to see meaningful activity on that market. There are just small volumes trading, so whatever we are getting there cannot buy anything,” he said.
In January this year, Zimbabwe’s largest cooking oil manufacturer, Surface Willmar, was forced to suspend operations over foreign currency shortages just a year after it acquired the country’s oldest cooking manufacturer, Olivine Industries.
Major cooking oil producers in Zimbabwe include Surface Wilmar, Olivine Industries, Willowton, Cangrow Trading, United Refineries and Pure Industries.