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Africa Moyo and Ellen Chasokela
Milk processor, Dairibord Zimbabwe Limited (DZL), has approached Government with a view to be exempted from paying duty in foreign currency for imported raw materials particularly concentrates that are used for making juices.

This comes amid reports local firms are losing business to foreign companies mainly from South Africa that can afford to reduce their prices by up to 25 percent since they use a softer currency.

DZL argues paying duty in local currency is designed to ensure the products are sold at affordable prices.

DZL imports concentrates for its juices such as Fun ‘n Fresh, but given that Government announced in the 2019 Budget that some products and/ or raw materials must pay duty in foreign currency, the listed concern is keen to be exempted from paying duty in forex to keep prices low.

Company chief executive officer Antony Mandiwanza, said an application has since been filed with responsible authorities.

“We have already submitted an application to the Minister of Finance and Economic Development, (and) Minister of Industry and Commerce to consider exempting these concentrates on duty,” said Mr Mandiwanza. “Indeed, we know that there is a duty paid in foreign currency.

“Unless you are 100 percent exporting and earning foreign currency, it’s a cost that has to be passed down to the consumer.

“So we have already applied and we know that matter is under serious consideration. The reply I have received so far is to say, ‘yes’. In fact, we also put the same to Zimra so that together they can come up with a response but sooner than later, a positive response will be received.”

DZL also imports “significant quantities” of bulk powdered milk, which is used in the manufacture of yoghurt and ice creams; and polymers, the granules used to make plastic packaging for beverages and milk.

Mr Mandiwanza said the company’s import bill stands at between $1,8 million to $2 million per month, to cover the raw materials.

DZL meets the import bill using resources it generates from its exports which include steri milk, maheu, super milk and tea (Quick brew tea).

The entire milk industry’s import bill stands at $7 million per month.

DZL, which has a market capitalisation of $62 million and commands a market share of 40 percent in the milk processing industry, says it does not want to burden consumers with high prices considering the economic challenges the country is going through, hence the need for a waiver of duty in foreign currency.

Mr Mandiwanza said it was critical that the sector gets a conducive operating environment so as to fend off competition from neighbouring countries.

Estimates suggest that Zimbabwe has lost considerable market share to foreign products, particularly from South Africa, as manufacturers in that country can bring their goods even at “a 25 percent discount”, but still remaining lowly priced compared to locally produced goods.

The South African manufacturers would also make money from exchanging the US dollars obtained locally.

This denies local firms an opportunity to broaden their operations and employ more people while also paying more statutory requirements to Government.