Forex problems for cooking oil firms persist

Zimbabwe’s cooking oil firms are struggling to access adequate foreign currency from the Reserve Bank of Zimbabwe managed foreign currency auction system to import critical raw materials amid fears of shortages in the market, industry players said.

Cooking oil companies are getting about US$2m every week, which translates to US$8m a month.

However, the cooking oil companies require about US$3m a week or US$12m a month, the sector’s president Busisa Moyo told Business Times.

He warned the market could experience shortages if the situation does not improve.

“We are accessing US$2m weekly against a demand of US$3m per week, a situation which could affect our viability.

As a result, our capacity utilisation dropped by 20 percentage points to 40% from around 60% in September,” Moyo said.

Remarks by Moyo this week were in sharp contrast from Industry and Commerce Minister, Sekai Nzenza’s sentiments, who a fortnight ago told this newspaper that foreign currency auction system was serving the industry well as they were accessing adequate forex to import critical raw materials.

Moyo said the oil industry players used to access US$12m during the times they used letters of credit, but the high interest rates caused them to constantly review cooking oil prices.

The sector, Moyo said, requires forex to procure soyabeans for cooking oil and cattle feed and crude oil to avert cooking oil shortages.

He said the reduction in forex access could destabilise the market, although the foreign currency auction system has helped some members to procure raw materials.

Confederation of Zimbabwe Retailers president Denford Mutashu said cooking oil is readily available in shops due to the efficiency of the forex auction market.

“The effectiveness of the forex auction market has ensured that the prices have stabilised as the oil companies are easily accessing forex, but more needs to be done to ensure capacity utilisation does not go down and to ensure the shops do not have shortages,” Mutashu said.