- Export Challenges: CAFCA's export volumes declined by 22% in the third quarter
- Strong Domestic Performance: CAFCA's domestic sales surged 21% year-on-year, driven by strong demand in the aluminum sector
- Need for Innovation: CAFCA needs to develop innovative strategies to mitigate the impact of foreign currency shortages
Harare-CAFCA Limited Zimbabwe has faced significant foreign currency challenges in the third quarter of 2024 ended 30 June, leading to depressed export volumes. Despite this, domestic sales increased by 21%, painting a positive outlook for the company.
While the introduction of the Zimbabwe Gold (ZiG) and increased use of the US dollar have stabilized the third quarter trading environment, accessing foreign currency through the government-controlled "willing-seller willing-buyer" market remained a major hurdle.
This market, where the government sets daily upper and lower limits for the exchange rate, has created a significant gap between the official rate and the black market rate creating a premium of 74% by the end of July.
Export volumes were 83 tonnes in the current quarter compared to 106 tonnes in the same quarter last year.
CAFCA's export markets in Malawi, Mozambique, and Tanzania were also affected by the foreign currency shortage, as these countries struggled to secure enough foreign exchange to replenish their stocks.
The Tanzanian market also faced increased competition, further contributing to the decline in export volumes.
Despite these challenges, CAFCA's domestic sales surged 21% year-on-year, driven by strong demand in the aluminum sector.
Turnover also increased to 154 million from 37.4 million.
As a result, the company remains optimistic about its overall performance for the full financial year 2023/2024, projecting volumes to exceed last year's figures.
CAFCA however, needs to address the persistent foreign currency challenges. The company needs to develop innovative strategies to mitigate the impact of forex shortages and navigate the volatile regional market dynamics.
Overcoming these obstacles will be crucial for CAFCA to achieve its full potential in the coming year.
CAFCA manufactures and supplies cable and allied products for the transmission and distribution of electrical energy and telecommunication. Its primary market is Southern and Central Africa, although it has an export footprint that extends to parts of Europe, including Russia.
The company prides itself in manufacturing over 900 cabling products to British, South African and Zimbabwe quality standards, including 11KV XLPE cables. CAFCA Limited recovers decommissioned cables for recycling; and supplies telecommunication cable ranging from indoor cable to underground cable and aerial self-supporting cable. Established in 1947, CAFCA is a subsidiary of CBi Electric African Cables (South Africa) which is owned by Reunert Limited (South Africa).
Equity Axis News
