Listed sugar producer, starafricacorporation Limited (SACL), says it will be anchoring its business on aggressive export strategy to mitigate against drawbacks being experienced locally.
The approach intends to cushion the sugar producing firm from persistent lack of foreign currency that has affected operations.
This comes on the back of a decline in SACL’s production capacity for the period up to September 2019 that saw output dipping by 3 744 tonnes from 35 791 to 32 047 tonnes, the comparable period in 2018, owing to setbacks encountered in 2019. The key challenge was severe electricity outages.
2019 also saw dwindling aggregate demand by consumers as they accustomed to macro-economic adjustments, predominantly the restoration of the local currency (Zimbabwean dollar) after a decade long use of multi-currencies as legal tenders.
However, SACL says it will now direct its focus on widening its exports into established and new markets in SADC and the Common Market for Eastern and Southern Africa (Comesa).
“The major growth strategy for the company hinges on export markets that include existing Southern Africa markets and Central and East African markets into which the company has just begun to make inroads,” said the company.
Although still cautious in approach, the sugar making firm highlighted that it remains positive after Government announced the end of austerity measures towards the end of last year, which is consequently expected to unlock potential spending by consumers.
“Notwithstanding the short to medium term forecast of a challenging trading environment, we believe that strategies being pursued, coupled with the eventual cessation of current austerity measures, will see the company remain on a sound financial footing.
“Prospects of a better 2019/2020 farming season are expected to ease pressure on Government for food imports and will also ease other local cost pressures,” added the sugar concern.
In his 2020 budget statement, Finance and Economic Development Minister Professor Mthuli Ncube, announced that the budget marks exit from austerity to growth stimulation and employment generation era through production oriented investment and productivity. SACL is among several enterprises in the country whose production was severely affected by electricity outages, which saw power cuts for lengthy periods of up to 15 hours and beyond across the country.
The aforementioned scenario has, however, led capable manufacturing sector players to establish solar energy plants to alleviate the energy challenges.
Regardless of the challenges, SACL realised a turnover of $132,1 million for the period up to September 2019 compared to $28 million recorded in prior year comparative period.