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Enacy Mapakame
Cables manufacturer, CAFCA Limited’s export volumes for the first quarter to December 31, 2019, jumped by 69 percent compared to the same quarter in the prior year.
CAFCA attributed the growth to some successful consignment stock initiatives, but also noting the company was coming off a low base.
Local volumes decreased by 13 percent reflecting the recessionary monetary policies in place.
In 2016 Government implemented a trade protectionist measure through the promulgation of the Statutory Instrument 64 of 2016 (later adjusted to SI-122 of 2017), which was meant to limit the importation of products that can be made locally to boost local consumption and industry activity.
SI-122 was, however, temporarily suspended to allow those with foreign currency to import products and avert shortages especially of basic commodities.
But of late, local sales volumes across sectors have been going down as the market responds to the prevailing economic environment.
The obtaining economic environment has been challenging for industry resulting in reduced production and sales volumes as disposable incomes continue to decline due to inflationary pressures.
The country has also suffered poor energy supplies and limited foreign currency making it difficult for businesses to import essential materials as well as meet their foreign obligations.
Market watchers contend that local companies need to be more creative in their product mix as well as look at foreign currency generation initiatives in order to offset the burdens caused by limited foreign currency on the official interbank market as well as the inflationary pressures.
“Hyperinflation is being hedged by maintaining our finished goods stock levels, which are currently at 707 tonnes against a stable monthly sales model of 140 tonnes,” said CAFCA in a trading update for the quarter under review.
Despite the challenges, management at the cable manufacturing firm remains upbeat of reporting a positive volume out turn with half year figures expected to be above same period in the prior year.
“We have no reason to believe that the next three months will be any different to this quarter’s volumes.
“Accordingly, we are forecasting a six monthly volume that will be slightly above the previous year’s six monthly volume,” said CAFCA.
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