DELTA Corporation says it faced the gloomy prospect of halting all its business operations this month owing to a crippling foreign currency shortage that has paralysed the economy.
To cushion itself from the adverse impact of the unrelenting forex crunch, Zimbabwe’s largest brewer had decided to price its products in US dollars, a decision the group has since reversed following consultation with government. This week, the company, however, increased prices of its beer brands.
The Reserve Bank of Zimbabwe (RBZ) has been struggling to allocate Delta US$5 million it requires monthly to sustain its business operations. From that amount, US$2 million is channelled towards production of the company’s soda drinks brands. Company secretary Alex Makamure told businessdigest this week that as the foreign currency crisis became more pronounced, the firm “virtually closed” its soft drinks business, with the bleak prospect of halting operations in Zimbabwe.
“The engagements with the stakeholders resulted in sharing the perspectives of the impact of selling exclusively in one of the currencies in the basket of currencies in the multi-currency framework. The company did not arrive at this decision lightly,” he said.
“To illustrate this, the soft drinks business was virtually closed in December, the other businesses were expected to stop trading by mid to end of January as we were fast running out of certain ingredients. There were two clear alternatives: to run down the remaining stocks and shutdown . . .”
Owing to the erratic hard currency allocations from the central bank, the brewer has been struggling to satisfy its debt obligations amounting to US$60 million owed to various creditors.
“Delta has not been able to service its debt obligations to various creditors due to the foreign currency issues.
“We owe our creditors in excess of US$60 million in addition to foreign loans of US$45 million,” he said.
Makamure said the company remained in a “precarious position” and had been surviving on lifelines from its parent company, AB-InBev, which acquired a controlling equity stake in the local brewer in 2017. So far, AB-InBev has shelled out US$60 million to keep Delta afloat.
Last year, Makamure told businessdigest that the viability of Delta’s Shumba Maheu business unit with a monthly turnover of over US$1 million was being threatened by the scarcity of foreign currency required to import packaging material.
The brewer established the Shumba Maheu business unit in 2015 as part of the beverages manufacturer’s plan to diversify. Before local production of the Shumba Maheu product brands, Delta used to import the starch-based non-carbonated and alcohol-free beverage from an associate company in Zambia.
— Zimbabwe Independent