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Dumisani Nsingo, Senior Business Reporter
ONE of the country’s leading cooking oil and soap manufacturers, United Refineries Limited (URL) is hesitant to invest more than $1 million towards the setting up of a laundry-powdered soap plant in the face of stiff competition due to an influx of cheap imported products on the market.
URL chief executive officer, Mr Busisa Moyo said plans to set up a powdered soap plant were still in progress but the company was focusing on growing its green soap bar as it continues to monitor market trends on the concentrate product side.
“We are still working on this (introducing powdered soap) issue and a plant has been identified and financing arrangements are being put in place. Our focus has been on growing our green bars, which is an alternative to powdered soap.
“We are also not sure if we will get protection if we start producing powdered soap in the country. Currently all powdered soap used in Zimbabwe is imported or imported in bulk and packed in the country,” said Mr Moyo.
Competition and Tariff Commission (CTC) chairman Mr Dumisani Sibanda said most local products were failing to grab the market niche due to their un-competitive nature against imported goods.
“Our cost drivers are just not competitive, these include our regulatory, water, power costs and inflexibility in labour laws and generally the economy has a rigid cost structure which leads to us not being competitive. We need to be competitive both locally and globally.
“We need new technologies, which we don’t have. Introducing tariff barriers has its limitations because instead of protection it ends up promoting inefficiencies as it will lead to many industries which are not performing well being seen as if they are performing,” Mr Sibanda said.
Bulawayo-based economist Dr Bongani Ngwenya said the influx of cheap imported products was largely due the failure by the local industry to meet demand.
“Our local industry capacity is precariously low evidenced by the import bill that is unsustainable. As long as the local industry cannot meet the domestic demand, the challenge or problem of competition from cheap imports will continue to impact negatively on our effort to resuscitate our domestic investment and foreign investment.
“The challenge is the productive capacity of our local industry, which is failing to meet local demand. As long as that gap exists it can only be filled by cheaper imports, unfortunately. This is an economic structural problem that we will continue to face until our productive capacity increases to certain levels,” he said.
Dr Ngwenya said the local industry can only be protected once the domestic demand capacity is met with the country increasing its export as well.
Meanwhile, URL is yet to start exports of its newly re-introduced range of soaps. The company re-introduced three soaps late last year namely Image, Vogue and Fresh Health Joy’s packaging is inscribed in English as well as Portuguese specifically aimed to target Angola and Mozambique, which are Portuguese speaking nations.
“We have had huge demand locally and have not yet started exporting although we are aware of traders in border cities who are buying our products,” Mr Moyo said.
URL fell short of reaching its anticipated capacity utilisation of 80 to 90 percent last year due to shortage of raw material after having managed to grow its business by 15 percent over the last three years.
“We fell short due to a shortage in local raw materials earlier in the year, depressed festive demand and shut-downs for re-tooling but still achieved a 72 percent capacity utilisation and 50 percent for our soap lines,” Mr Moyo said.
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