The graph below shows Seed Co’s tax expenses over 5 half-year periods in ZW$ millions. Expenses shoot in 2019 due to exchange losses and inflationary pressures and in 2022 due to exorbitant repo rates

Harare- The largest seed house in Zimbabwe, Seed Co Limited says its future growth focus remains grounded by a complex of calamities, from within the local market to the regional markets despite expecting volumes growth courtesy of improved sales in the outlook.

Within the local market, inflationary pressures ahead of the elections period, a fast-depreciating currency and biting repo rates remain the elephants in the room. This is despite the Group expecting local operations to experience volume growth due to an influx of hard currency revenue from the encouraging export market and a significant increase in local sales as the market twists more to dollarisation.

Seed Co is a local maize, wheat and soyabeans seed giant while it further exports yellow maize seed, white maize seed, soybean seed, and sunflower seed for lucrative Zambian and Kenyan markets where there is economic stability courtesy of policy consistencies in the respective countries and confidence in the currency.

“In Zimbabwe the business is expected to experience volume growth as well as a notable increase in the contribution of hard currency revenue from encouraging export growth and a significant increase in domestic sales in USD,” the Group said in a trading update.

“However, inflation, foreign exchange, and interest rate risks remain significant in Zimbabwe and throughout Africa, as the Group nears the end of its fiscal year, “added the Group

On regional performance, the Group said, “On a regional level, a mixed volume performance is predicted, with growth forecast in some regions of Southern Africa and East Africa and a drop due to drought in other regions of East Africa.”

By Grade 7 logic, a high Repo Rate can cause a range of effects on the overall economy whether it is an impact on the banking sector, an impact on an individual (average citizen) or some other aspect of the economy. Repo rates regulate a country’s money supply, inflation levels and liquidity. The levels of the repo are directly related to the cost of borrowing for banks. The higher the repo rate, the higher will be the cost of borrowing for banks and individuals. After analysing the cost of funds and liquidity position, banks may begin to pass on their interest rate burden to their end customer in the form of elevated lending rates. That means higher equated monthly instalments for existing borrowers and a higher rate of credit for new borrowers.

Therefore, interest rates at 200%, the highest in the world will make borrowing more expensive for the Group in local currency and affect the consumers’ purchasing behaviour through exorbitant prices and borrowing costs.

To overcome this, the Group will turn to US dollar borrowings where the rate is cheaper at 9% and meet its obligations for continued operations.

Borrowing costs have affected productive borrowing for many industrial players not limited to Ariston Holdings, and Delta Corporation resulting in reduced revenues while inflationary pressures have eroded the consumer purchasing power as most consumers are civil servants who are paid in the worthless Zimbabwe dollar further limiting sales volumes for companies.

As the election period is set to arrive, fiscal indiscipline is expected to gain momentum leading to the high liquidity of the Zimbabwe dollar in the market as the government battles to fund election projects particularly through availing food staff in rural areas and paying its suppliers. This will cause inflationary pressures which will ultimately weigh on the Group’s performance. 

On the regional scale, with the looming energy crisis and global recession, nations developed nations will keep on giving life to their industries by using dirty energy, coal. There is no sign that global temperatures will decline, hence, drought spells are likely to continue haunting Eastern Africa impacting Seed Co’s full potential.

To deal with uncertainty on the local scale, Seed Co bided its farewell with the Zimbabwe Stock Exchange (ZSE) in January 2023 to the more flexible United States dollars bourse, Victoria Falls Stock Exchange (VFEX) to preserve shareholders’ value and retain 100% of their profits.

Meanwhile, during the reporting period, volumes increased by 14% for the cumulative nine months compared to the same period the prior year, and by 46% compared to the same quarter prior year, helped by ample stocks, exports, record local sales of wheat and soybeans as well as favourable rainfall projections towards the start of the main planting season.


Resultantly, revenue increased by 12% compared to the cumulative nine months, and by 14% compared to the same quarter the prior year.

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