Wednesday, 8 May 2019

FOREX CRISIS : FOREIGN INVESTOR THREATENS TO PULL OUT


A FOREIGN investor is considering pulling out of the country after its proposed US$2 million diaper manufacturing project in Bulawayo stalled due to a shortage of foreign currency to import raw materials.

In an interview, Masters Diapers Zimbabwe director Mr Nigam Desai, whose project is the first of its kind in the city, said their investor, a Mauritian company, which is registered in South Africa, has given them 30 days up to May 21, 2019 to show progression of the project.

“Recently, we had a meeting with our investors and they expressed concerns on the delay of this project going ahead. It’s now almost one year and they have been very patient but they have now come to the point where they’re considering withdrawing the investment from Zimbabwe,” he said. 

“This is due to the fact that the machines have been here in the country for almost a year, the concerns are that the machines are sitting idle, gathering dust and rusting and the technology has been compromised.

“You can’t allow the machinery to sit like this for too long, it’s not generating any income and maybe in two-three years time, the machines will become obsolete because the technology is moving at such a fast pace.”

The foreign investor bought the equipment for Masters Diapers Zimbabwe with the hope that the local company would source its own income or foreign currency to secure raw materials for the project to take off.

The diaper manufacturing business was expected to kick off between November and December last year but still hangs in the balance as Masters Diapers Zimbabwe is yet to secure an undisclosed amount of foreign currency allocation from the Reserve Bank of Zimbabwe (RBZ). 

“As such, they (investors) do not see solid direction in Zimbabwe, all they got are promises of various Government officials,” Mr Desai said, adding that RBZ Governor Dr John Mangudya had assured them of forex allocation.

“How can we ask our investors to wait? Recently, they gave us 30 days that if nothing solid comes up, then the machines will be repatriated back to where they came from and this is a sad situation and we have tried everything and we don’t know what to do.”

Glue, palp and tapes are some of the raw materials that would be imported from around the world from countries such as China, America, India and Singapore.

Masters Diapers Zimbabwe said in the past it made several contact attempts through its banks directly with the Central Bank and Dr Mangudya had assured the company in November last year that funds would be availed for the project. Comment could not be obtained from Dr Mangudya yesterday as his mobile phone was not being answered.

“We recently met the Permanent Secretary in the Ministry of Industry and Commerce (Dr Mavis Sibanda) and she was delighted with this project being one of the first projects being put in Bulawayo and was saddened by the fact that if things don’t work out investment will be withdrawn.

“She could not believe the project has taken over a year and nothing has happened and she did say that she will try her best to look into it and see what she can do for us,” Mr Desai said.
  
“So, we have now come to a grinding halt, staff have been trained for four months and all that money is going to the waste, monies have been put into revamping this whole premise. The whole project is going to fail and this is not a good picture for foreign investors that want to come here and invest in Zimbabwe.”

It was hoped that once the plant starts producing, Masters Diapers Zimbabwe would export 60 to 70 percent of its product to countries like Zambia, Malawi, Mozambique and the Democratic Republic of Congo.

The country’s trade promotion and export development body, ZimTrade, has already done a market research for the foreign market with indications of a readily available market.

At present, Zimbabwe is spending between US$15 million and US$18 million annually importing diapers. It is hoped that if Masters Diapers Zimbabwe is to enter into the export market, this could go a long way in generating foreign currency as well as reducing the country’s trade deficit.  Chronicle

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