TimothyMichael Tome
Starafricacorporation has commended the government’s position to reinstate import duties on white sugar citing that it will boost the domestic market.
The duty reinstatement was effected on the 1st of February 2024.
Government promulgated Statutory Instrument 98 of 2022, which suspended custom duties on selected importation of basic commodities including sugar, cooking oil, margarine, bath and laundry soap and petroleum, following extortionate pricing of basic commodities by the retail sector.
The treasury said, then, that the move was meant to eliminate harmful and destabilising arbitrage conditions that had pervaded the economy at the expense of the generality of citizens.
The period saw increased import of unfortified sugar brands, which are non-compliant with sections 4 and 5 of the Statutory Instrument of 2016 which demand that sugar be fortified with forticants that are validated and approved by the Ministry of Health and Child Care.
Analysts, however, claim the policy decision was retrogressive as it took a toll on some of the milestones achieved in scaling up local industry.
Calls have been made for the government to curb the import of merchandise that is readily produced by local manufacturers.
The reinstatement of the import duty on sugar is expected to boost domestic sales for Zimbabwean sugar producers.
However, even after the reinstatement sugar continues to infiltrate the local borders unhindered.
“The industry welcomes the move by the Government to reinstate import duties on selected products that included white sugar, with effect from 1 February 2024.
“However, the introduction of the tax on added sugar in beverages and additional withholding taxes, as well as the changing of the Value-Added Tax status for white sugar from Zero-rated to Exempt adversely impacts overall demand and margins, “ said starafrica corporation chairperson, Rungano Mbire, in the group financial results for the year to March 2024.
Recently Zimbabwe Sugar Association secretary general, Tracy Mutaviri, spoke on how the country had excess sugar supply but unfortified sugar imports from regional countries and beyond continue to find way in.
She said SI 120 of 2016 requires that sugar be fortified with vitamin A, but the country continues to import unfortified sugar.
“We have an unfair competition of unfortified sugar imports, Zimbabwe is one of the nine countries in the world that fortify sugar, and we do that for US$9-10 dollars per tonne, so if you open borders and allow for non-fortified sugar you are putting us at a cost disadvantage, why are we importing, we need to contain the circulation of local funding within the country.
“We have handed over names and locations of where smuggled sugar is found but nothing has happened and we wonder why? ,” said Mutaviri.
Operationally, starafrica Limited managed to prevail through a challenging trading and operating environment, which was characterised by continued depreciation of the local currency and high inflation.
According to starafrica corporation, the group was impacted by high borrowing rates and tight liquidity in the year to March 2024, as the Reserve Bank of Zimbabwe (RBZ) continued with a tight monetary policy stance to curb inflation and attain exchange rate stability.
The group’s total turnover increased by 23 percent to ZWL1, 90 trillion in the year under review from ZWL1, 54 trillion realised in the previous year attributable mainly to inflationary pressures.
However, the group incurred an operating loss of ZWL679 billion for the year against a profit of ZWL 13 billion in the comparative year and this was primarily driven by a three-month plant shutdown owing to raw sugar supply challenges and increased cost of key raw materials and other overheads.
The group’s subsidiary, Goldstar Sugars (GSS), reported a 32 percent decrease in sales volumes of granulated white sugar during the year, declining to 55,799 tonnes from 82,321 tonnes recorded in the previous year.
This was resultant of a 32 percent decline in production throughput which closed the year at 52,605 tonnes from 77,270 tonnes due to raw sugar supply issues.
Another subsidiary, Country Choice Foods (CCF) also reported a 39 percent decline in sugar specialty products sales volumes to 1,244 tonnes from 2,048 tonnes in the previous year.
Product uptake was also adversely affected by exchange rate distortions that persisted for most of the year in mainstream retail outlets.
Bongani Ndlovu