HARARE – Zimbabweans should brace for cooking oil shortages after one of the country’s biggest manufactures, Wilmar Group, announced it was unable to re-open its factory after the Christmas and New Year’s holidays due to a foreign currency crunch.
Wilmar Group – the manufactures of Olivine cooking oil, Perfection washing soap, Buttercup Margarine, Jade bathing soap and Green Valley baked beans among other products – said they owed their foreign suppliers US$11 million after last servicing their debt in July 2018.
At the heart of the company’s problems – which are industry-wide – is a failure to access foreign currency, whose allocation is decided by a committee made up of Finance Ministry and Reserve Bank of Zimbabwe officials.
Ironically, the Ministry of Finance is a shareholder in the company.
“The board and management of Olivine Industries regrets to advise its customers that all manufacturing operations has stopped. The company has struggled to restart its manufacturing operations in January 2019 for lack of imported raw materials,” the company said in a statement.
The company said it limped through 2018 operating at below capacity “due to shortages of raw materials procured through letters of credit established before September 30, 2018, and on foreign supplier credit lines which were last serviced in July 2018.”
The statement added: “The company currently owes US$11 million to its foreign suppliers who have since cut off supplies until the arrears are paid. The company awaits foreign currency allocations and is sitting with sufficient RTGS bank balances to pay off the foreign creditors in full and procure further raw materials.”
Wilmar said its efforts to engage the government and the Ministry “have not had any resolutions.”
Wilmar’s situation is playing out in many other companies, as pressure grows on Zimbabwe’s meagre foreign currency reserves. The government has diverted most foreign currency to finance subsidized fuel and wheat imports.
Companies like Delta Corporation, Zimbabwe’s largest brewer, have been stopped by the government from selling their products in United States dollars as industry heads inexorably towards a confrontation with the government.