- Strong Volume Growth: CAFCA achieved a 23% increase in overall volumes, driven by a 13% rise in copper-based products
- Export Decline: Export volumes fell by 39% due to foreign currency shortages
- Market Pressures: Competition from subpar smuggled imports and frequent power outages are impacting margins
Harare- Cables supplier and manufacturer, CAFCA Limited, has reported a robust 23% year-on-year growth in overall volumes for the first quarter of the 2025 financial year, according to its latest trading update.
This growth was driven by a 13% increase in sales of copper-based products, which remain a key revenue driver, and an exceptional 117% surge in volumes of other products.
However, despite this strong performance, CAFCA continues to face significant challenges that could hinder its growth trajectory.
One of the most pressing issues is the 39% decline in export volumes, primarily due to foreign currency supply gaps.
This challenge has been exacerbated by the recent increase in export surrender portions, which require exporters to relinquish a larger share of their foreign currency earnings to the government.
While this policy aims to stabilize the national currency and improve liquidity in the formal market, it has placed additional strain on exporters like CAFCA, reducing their ability to reinvest in operations and meet international demand.
The higher surrender requirements are likely to further constrain export volumes in the coming quarters, potentially eroding the company’s competitiveness in global markets.
Compounding these challenges is the influx of subpar smuggled imports, which are flooding the domestic market and undermining local manufacturers.
These low-quality, often cheaper products have intensified competition, forcing CAFCA to contend with margin pressures despite its volume growth.
The prevalence of smuggled goods not only distorts market dynamics but also poses a threat to the sustainability of local industries.
This situation reflects the dire need for government intervention to enforce stricter border controls, curb illicit trade, and create a level playing field for domestic manufacturers.
Operational challenges, particularly frequent power outages, have also impacted CAFCA’s production capacity and delivery timelines.
These disruptions have added to the company’s cost burdens and limited its ability to fully capitalize on the strong demand for its products.
Addressing these infrastructure deficiencies will require coordinated efforts between the private sector and the government to ensure a reliable power supply and support industrial growth.
Despite these hurdles, CAFCA achieved a 29% increase in revenue during the quarter, reflecting its ability to leverage volume growth and maintain a strong market presence.
However, the company’s trading margins remain under pressure due to intense competition and rising operational costs.
To sustain its growth momentum, CAFCA will need to focus on optimizing its supply chain, enhancing operational efficiency, and exploring new market opportunities.
Government intervention to address the challenges of export surrender requirements smuggled imports, and infrastructure deficits will be critical to creating an enabling environment for local manufacturers.
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