The graph below shows the Group’s Assets, PAT over 4 years

The government is on record of passing either policies of double standards or policy inconsistency

Harare- Largest food processor listed on the Zimbabwe Stock Exchange (ZSE) , National Foods Limited Zimbabwe says although policies passed by the government during the year have managed to curtail inflationary pressures and restore some form of currency stability, the reforms remain fragile as they hugely affect the consumer spending behaviour which is critical for businesses to thrive.

The Group said the policies, which included raising the repo rate in July by 120 basis points to a global record high of 200% and a tight quarterly monetary growth of 5% have been successful on instilling monetary discipline to-date, both within the formal and informal market as well as curtailing inflationary pressures and exchange rate volatilities.

However, the Group which displayed unparalleled growth in revenue, profit after tax and sectoral performance said it is also high time that the government should revise the same hawkish measures that have curtailed instability to alleviate consumer spending, a move that Authorities are likely to give a blind eye too. However, it remains uncertain if the government will still hold on to tightening the Real Time Gross Settlement (RTGS)  liquidity given the nation is heading for the 2023 elections.

“Following a series of policy interventions which were instituted towards the end of the period, inflation in the post year end period has declined markedly.”

“Whilst the interventions, particularly in respect of monetary growth and ZW$ interest rates have achieved their desired objective, they have also brought about reductions in consumer demand post year end,” the Group’s independent non-executive chairperson Toddy Moyo said in a statement accompanying the Group’s full year results for the period ended 30 June 2022.

“The migration out of this necessary readjustment period will require a gradual easing of these policies in order to recover consumer demand without reigniting inflation.”

Balancing economic growth and ensuring dovish policies is a non-start challenge for the government which is using hawkish tactics to resuscitate the dire economy. It is more like asking the government to produce a square circle, which is an impossible. The Group is appealing to the government to slash down the bank policy rates and loosen the tight monetary supply policy so that the consumers are equipped with enough money while banks can also borrow to increase productivity. However, the Group also says whatever step government will take to reduce interest rates burden and scarcity of money supply should not upset the money supply-productivity balance and also reignite inflationary pressures.

On the 28th of June this year, government through the Central Bank hiked the bank policy rates by a whopping 120 basis points to a record 200%, as it battled to curtail speculative borrowing and arbitrage opportunities on the parallel market. The government also maintained a tight quarterly monetary supply at 5% starving the Zimbabwe dollar liquidity. The measures were successful as the exchange rate rested at 800 from almost ZWL1000:US$1. It was the first time the exchange rate on the black market stabilised since the introduction of the Zimbabwe dollar in 2019.  Month-on-month inflation also responded positively from a higher of 30.5 in June to 25.6% in July, first decline in a while.

On the money supply front, quarterly reserve money supply for September continued to decline after increasing by 16.8% to ZWL39.2 billion in the third quarter, which translates to a 3.5 percentage points lower than a growth of 20.3% recorded in the second quarter of 2022 during the Group’s reporting period.

Bank policy rates at 200% and tight monetary supply has proved to be a double-edged sword after it also affected productive borrowing. The interest rates made it difficult, and are still making it for productive sectors to obtain loans. It made borrowing exorbitant, very costly. It is from that background that the Group expects the government to maintain a balance ignite consumer purchasing behaviours.

“With the improved stability, we would support a progressive easing of some of the measures, such that consumer spending can recover, albeit in a more stable inflationary environment,” Moyo added.

However, the government reiterated that interest rates are not to be reviewed any time soon or in the long run, but, will remain stable at 200%. Therefore, the Group needs to find alternative ways to boost sales without looking for government alleviation. In fact, the Group should worry more about the possibility of renewed inflationary pressures as the nation head towards 2023 election. With RBZ capture, government is likely to resort to the cranking machine to fund the 2023 election. This might be through funding security personnels, bonuses and distributing foodstuffs to buy votes per its tradition. Hence, the Group should be in a position to deal with inflationary pressures if any comes into play. Between 2017 August to 2018 August elections period, government increased money supply by 41% and the following year, stability became a history.

Meanwhile, revenue for the Group registered a 33% increase during the period under review to ZWL128 billion from ZWL96 billion in 2021 during the same reporting period driven by both volume growth and inflation driven price increases.  Volume for the period increased by 8% to 569,000 tons when compared to prior year.

Operating profit increased by 301% compared to prior year to ZWL 14.74 billion, whilst PBT increased by 1 390% to ZWL 20.4 billion. This was driven by significantly increased interest costs in line with higher interest rates; as well as a decline in equity accounted earnings of 41%, which was largely attributed to the disposal of Pure Oil during the period. Included in the reported PBT is a profit on disposal of Pure Oil amounting ZWL5.93 billion.

Resultantly, profit after taxation soared by 8436% to ZWL18 billion from ZWL211 million registered last year.

However, operational expenditure grew by 37% year on year to ZWL21 billion from ZWL15 billion, with correction of some major cost lines occurring in real terms during the year. Operating expenses were largely contributed by the costs of raw materials which shoot to ZWL92 billion from ZWL72 billion. The cost of raw materials besides inflation and exchange rate disparities were exacerbated by the Russia-Ukraine war which disrupted supply chains.

 “The inflationary environment meant that intense focus was required to ensure that the key aspects of the Statement of Financial Position were appropriately managed.”

“As a result, the Statement of Financial Position remains in a healthy position, with adequate resource to fund the expansion phase which the Group has embarked on.”

Sectoral performance

The graph below shows sectoral performances in percentage


Flour Milling

Volumes for the Flour unit decreased by 1.9% compared to the same period last year, with a slow-down in the last quarter, as price increases driven by higher international wheat prices and the reduced availability of local wheat dampened demand.

‘The Group is set to increase the flour production in 2023 after the full commissioning of the Bulawayo flour plant. The new mill is expected to increase wheat milling capacity by around 2,000 tons per month while the prospects for the current winter wheat crop look encouraging which is a most welcome development as it will reduce import dependency.

The mill comes at a very strategic time when the Russia-Ukraine war is disrupting glbal supply chains.

Maize Milling

 Volumes closed 2.3% below last year, largely due to rainfall disorders. During the reporting period, the rainfall was erratic and the harvest has been further disturbed by unseasonal winter rains. The Group anticipates the necessity of imports to fill the gap before the 2022-2023 harvest and the Group has already started on a maize importation program.

Stock feeds

Stock feed volumes increased by 12% compared to FY2021 driven by the poultry sector. However, beef volumes declined following the better summer season and consequent improved pastures.

“The phased 3-year upgrade of the Aspindale plant is now underway and has commenced with the installation of a PLC system which will enhance and optimise operational controls while further investment targeted at improving the efficiency of the Aspindale plant is planned for the year ahead.”


Volumes in the category advanced by 31% versus last year. Rice volume growth was driven by the informal sector, whilst Red Seal salt remained the brand of choice for consumers according to the Group.

 Traded Goods

 Volumes grew by 34% against last year, largely as a result of growth in the pasta category. The Board has approved the purchase of a new pasta line in response to the growing demand for pasta in the country, an investment that will also see the localisation of pasta production, which traditionally has been imported as a finished product. The project is set for commissioning in late 2023.

Snacks Volumes

 Volumes increased by 24% against the prior period, as the increased production capacity came on stream. Additional production capacity is set for commissioning early in the new financial year with a view to fulfilling demand, especially in the informal sector. In addition, work to broaden the portfolio continues, with the recent launch of a new range of premium sesame snacks.


Biscuit volumes declined by 3% compared to last year, with a marked reduction in volumes towards the end of the year. The decline was largely brought about by higher flour prices which impacted affordability of the product. Volumes have recovered early in the new financial year with the adjustment in pricing of competing “on the go” food products. The Board has approved the purchase of a new biscuit line, which will allow National Foods to extend its biscuit portfolio beyond the current basic loose biscuit proposition to more specialised biscuits such as creams. Work on the project is underway and the new line is expected to be commissioned late in 2023.

 Equity Axis News