Business / Local
Manufacturers in Catch-22 situation as SA Rand plummets
20 Dec 2015 at 10:54hrs | Views
THE plummeting of the South African rand against major currencies has been received by local manufacturers with mixed fortunes.
According to experts the free-fall of the rand has affected exports to South Africa, Zimbabwe's biggest trading partner while the prevailing situation has been advantageous to importers of raw materials and equipment as local companies import their products cheaply upon converting the firmer US dollar into rand.
As of Friday the US Dollar to South African rand South African exchange rate stood at $1 to R15,18.
Zimbabwe National Chamber of Commerce Matabeleland chapter vice-president Mr Crispen Mugova said most companies that traded in South Africa had running contracts in rand and are invoiced using the rand but their incurred expenses are in US dollars.
"When South African businesses pay after 30 days, companies don't get the same value, which they used to buy raw materials. Besides raw materials, our wages and production costs are in US dollars thus the profit margins are reduced," said Mr Mugova.
He said different sectors of the economy were affected by the depreciation of the rand as manufacturers ponder continuous sliding of the South African currency.
Mr Mugova also said the devaluing of the rand meant that local exports would become more expensive in South Africa thereby leading to a decrease in demand of Zimbabwean products.
According to experts the free-fall of the rand has affected exports to South Africa, Zimbabwe's biggest trading partner while the prevailing situation has been advantageous to importers of raw materials and equipment as local companies import their products cheaply upon converting the firmer US dollar into rand.
As of Friday the US Dollar to South African rand South African exchange rate stood at $1 to R15,18.
"When South African businesses pay after 30 days, companies don't get the same value, which they used to buy raw materials. Besides raw materials, our wages and production costs are in US dollars thus the profit margins are reduced," said Mr Mugova.
He said different sectors of the economy were affected by the depreciation of the rand as manufacturers ponder continuous sliding of the South African currency.
Mr Mugova also said the devaluing of the rand meant that local exports would become more expensive in South Africa thereby leading to a decrease in demand of Zimbabwean products.
Source - Sunday News
