Omnia’s Zim fertiliser business slows down

HARARE- JSE listed Omnia said its Zimbabwe business operation is facing a slowdown due to liquidity constraints in the country further to the adjustment on the unit’s earnings following the separation of accounts betweeN the Nostro FCA and the RTGS FCA in October 2018 and the subsequent introduction of an alternative currency in February 2019.

 Omnia is a diversified chemicals Group that supplies chemicals and specialised services and solutions for the agriculture, mining and chemical application industries and is present in 31 countries including Zimbabwe, while having a predominant base in South Africa.

In Zimbabwe the company has a major stake in Omnia Fertiliser Zimbabwe and Acol Chemical which are involved in the supply of fertiliser and agriculture chemicals. Agriculture is the mainstay of Zimbabwe’s economy accounting for over 15% of Zimbabwe’s GDP.

From the period October 2018 onwards, Zimbabwe has faced a challenge in terms of matching demand and supply. In formative months, the country experienced a spike in demand as inflation emerged. Into 2019 however, demand is gradually as most items are now beyond the reach of consumers.

Agriculture is however largely cyclical and these dynamics fully come into play close to the planting season’s commencement, which is typically in the final quarter of the year. Players responded by increasing prices to match costs although government meddled with pricing, thus constraining supply.

Seedco, which is the largest seed producer said in Harare on Thursday, that when it attempted to raise prices to match cost increases last year, government immediately summoned them for a review resulting in sub optimal price revisions.

It is largely expected that demand across the real sector will come off on the back of income erosion as the nation moves to its first recession since dollarization.

EQUITY AXIS NEWS

Respect Gwenzi

Respect is the Lead Analyst and Managing Director at Equity Axis. He has 8 years experience in respective fields of finance and media. Particular areas of expertise include Asset Management, Stockbroking and Financial Media. Respect is on a mission to change the course of Financial Media in Africa through digitalization

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