The Sunday News
Roberta Katunga, Senior Business Reporter
THE country’s biggest biscuit and candy maker Arenel has stopped mahewu production at its Bulawayo factories after sales plummeted by almost 75 percent as cheap imports into the country continue to threaten local industry.
The company said it had to halt production in January as sales were not moving resulting in the company sitting on 60 000 cases ready for distribution. Speaking after a tour of the company’s premises and new plants by Acting President Phelekezela Mphoko on Thursday, Arenel Beverages general manager Mr Barry Wolhuter told Sunday News Business that foreign produced mahewu was being dumped on the local market thus affecting the company’s direct sales and subsequently leading to the current halt in production.
“We are not producing any mahewu and the factory has been shut since January as we are sitting with over 60 000 cases in distribution. Mahewu being imported into Zimbabwe does not attract a duty or surcharge so foreign produced mahewu is being dumped on the market as it can be sold in dollars in Zimbabwe.
“These companies are taking advantage of their depreciating local currencies,” said Mr Wolhuter.
He said when Arenel started producing the sweet beverage, demand locally was high but the company was limited to what they could produce as the local bottle manufacturers could not keep up with the volume they required.
He said the recent amendment to Value Added Tax (VAT) Act meant that VAT input cannot be claimed on essential packaging material and services.
“External producers receive relief in their home country and not subject to VAT when the product is imported into Zimbabwe, this equates to a 15 percent advantage,” Mr Wolhuter said.
Meanwhile, Arenel is set to increase its workforce to about 800 people by August following the implementation of new products that include snacks, mayonnaise and water.
Procurement manager Mr Gareth McMaster said an initial investment of $2 million is needed for the water and mayonnaise plants with 350 upstream and downstream jobs being created once at full production.
Arenel’s new plants have the capacity to produce 300-350 tonnes of snacks per month, one million litres of water per month and 300-700 tonnes of mayonnaise per month depending on the market.
“Commissioning of the snacks plant will be done in mid April while full production is expected by end of June while the full production for water and mayonnaise is anticipated to be in July. We have a belief in Bulawayo and the economy and we believe that it is unsustainable to continue importing goods thus we feel with this opportunity we have to find ways to manufacture locally and boost our economy,” said Mr McMaster.
He said Arenel has, however, had to shelve its carbonated soft drinks line following slow uptake of Maheu.
He said the carbonated drinks line needed an initial investment of $5 million and was meant to create an additional 100 jobs for production downstream.
He said the project has not been cancelled but just put on hold.
“All our machines will be working 24 hours five days a week once at full production. Arenel is committed to continuing business here in Bulawayo and we are appealing to Government for temporary protection so that our products do not suffer due to cheap imports,” said Mr McMaster.
The company which employs 581 workers has the capacity to produce 100 tonnes per 24 hours of biscuits and 80 tonnes of sweets.
Acting President Mphoko said Government was obligated to ensure that companies in Bulawayo survive and he said it would not allow the industries to die. He said it was Government’s responsibility to ensure people are employed and that there is production across board.
“There is a new approach from the Reserve Bank of Zimbabwe and the Ministry of Finance which will see loans being availed to manufacturers with bankable projects. Nobody will come from outside to revive our industries but we have to come up with solutions ourselves,” said Acting President Mphoko.
He commended the work being done by Arenel and said the company was a good example of the positive work in the country to revive the economy which is not recognised as people always dwell on the negatives.
The Zim Asset familiarisation tour done by the Acting President saw him and a delegation that included Minister of State in the Vice- President’s Office Tabetha Kanengoni-Malinga, Minister of State for Bulawayo Metropolitan Provincial Affairs Eunice Sandi Moyo, Bulawayo Provincial Administrator Mrs Khonzani Ncube and senior Zanu-PF officials, visit companies that include Datlabs, CSC, BSI Steel factory, United Refineries Limited and Choppies.
