Ashly DhaniBusiness Writer
Cafca Limited, a leading manufacturer of electrical cables in Zimbabwe, has reported a significant decline in export volumes for the quarter ended June 30, 2024.
Speaking on Capitalk FM’s Business Focus Programme on Wednesday, Cafca CEO Vimbayi Nyakudya, attributed the 21,6 percent drop to foreign currency difficulties faced by customers in neighbouring countries and increased competition in the Tanzanian market.
Export volumes were 83 tonnes in the current quarter versus 106 tonnes in the same quarter last year, the company said in a recent trading update.
Malawi and Mozambique have been experiencing some foreign currency shortages over the past few months, and they have struggled in making payments to the company, Nyakudya revealed.
“This has resulted in a slowdown in their uptake.”
He emphasised that despite the challenges, Cafca remains committed to its regional expansion strategy.
“We are one of the regional players who can produce cables from end to end,” he said. “Our competitive advantage is premised on our manufacturing capacity.
“The company has been exporting its products to various countries in the Southern African Development Community (SADC) region, including Malawi, Mozambique, Tanzania, Botswana, Angola and as far as Rwanda.
However, the recent increase in freight costs, particularly due to rising fuel prices, has made it difficult for Cafca to compete with local manufacturers in some markets.
“With Tanzania and Rwanda, we have seen other players coming into those markets to build up factories,” Nyakudya explained.
“The freight cost alone has been significant enough to reduce our competitiveness when we compare with guys that are manufacturing in those countries. Because of the freight costs, we are out-priced in those markets,” Nyakudya revealed.
While Cafca’s brand remains strong, the company has had to adjust its export strategy to address these challenges.
Despite the decline in export volumes, Cafca has experienced growth in the domestic market, driven primarily by increased demand from utilities such as ZESA and the rural electrification agency.
The Government’s focus on infrastructure development, including the construction of a new city and the replacement of copper cables with aluminum cables, has provided a boost to Cafca’s sales.
“One of the significant factors to drive our volumes by 21 percent has been the uptake by the utilities,” Nyakudya said.
“We have seen new projects coming through in terms of the new city. We have seen the ZETDC trying to replace the copper cables with aluminum cables in different urban areas that they operate.
“Cafca has also benefited from the increasing preference for aluminum cables as a safer and more cost-effective alternative to copper cables. The company has invested in expanding its manufacturing capacity to meet both domestic and export demand.
“Cafca has got a lot of capacity to meet both local and export markets,” Nyakudya stated.
“And the local market has been our primary objective. And, from a capacity perspective, I believe we have got enough capacity.
“The company has also been working to improve the quality and competitiveness of its products to ensure that they remain attractive to customers. We have always tried to keep abreast,” Nyakudya said.
“From a capacity perspective, we are benchmarking ourselves against the best. We have even sought to exceed what our competition has been doing.
“While the Zimbabwean economy has faced several challenges in recent years, including the introduction of the local currency the Zimbabwe Gold (ZiG), Cafca has remained optimistic about its future prospects.
The company has seen an increase in local currency transactions and is confident that the Government’s efforts to support the local currency will continue to bear fruit.
“The ZiG came at the time when the country was grappling from the drought or coming out of the drought, and the commodity prices just plunged,” Nyakudya said.
“But now we see there’s been a confidence that has been growing in the use of the local currency.”
Overall, Cafca remains committed to its growth strategy and is confident that it can overcome the challenges it faces in the export market. The company’s focus on quality, innovation and customer satisfaction will continue to drive its success in the years to come, according to Nyakudya.
Online Reporter