Arenel shelves $4 million investment plans

THE country's largest biscuit and sweet manufacturer, Arenel has shelved plans to invest more than $4 million in setting up an additional two plants owing to unfair competition exerted by imported products.

Arenel had set aside $2,5 million for the construction of a Mahewu plant in Bulawayo as part of its programme to diversify products and tap into the growing demand for the beverage. The plant had been earmarked for commissioning this year.

The company had also proposed to construct an estimated $2 million purpose-built production facility to house a new enlarged biscuit factory together with an automated plant which was expected to be commissioned in 2016.

Arenel managing director Mr Joshua Lepar said the company had been forced to temporarily put on hold its expansion projects due to failure to fully utilise its production capacity owing to an influx of cheap imported products that have flooded the market.

"Unfortunately we have had to put these plans on hold as we are still fighting the imported products coming into the country and our existing production capacity is not being fully utilised with our existing plant. We are trying to lobby the Government to ensure that we are placed on a level playing field with all imported products, as our cost of manufacturing in Zimbabwe is so much higher than our external competitors who are sending products into the country.

"Our key raw materials are also much higher locally than what our foreign competitors are accessing in their own markets. The latter coupled with erratic power supply and other local barriers make Zimbabwe a difficult manufacturing environment but we are going to look for opportunities and go for them in the Arenel manner," Mr Lepar said.

He said the company was however, looking to growing its export markets despite being charged high duty on raw materials which cannot be sourced locally.

Arenel exports its products to Zambia, South Africa, Malawi and Nigeria and has set its sights on spreading its tentacles across the continent by including Angola, Uganda and Ghana.

"We are very happy to say that our exports are growing as Arenel products gain popularity as a quality, value for money item.

We are at this time looking to add three countries to our export strategy in 2015.

"The more we gain a foothold in the export market with increased export sales the more we in our own "small way" are helping the country earn much needed foreign currency. We are trying to play our part for our country both at home and outside our borders."

He said the company would continue to explore other food "space", which might turn out to be better economic opportunities than additional biscuit production capacity.

"That is one of our strengths to survival in these very turbulent times of cash restriction in the economy, we are able to adapt and redirect to the prevailing circumstances. We made a projected decision to increase biscuit capacity and now find it inopportune.

"In light of our present findings we are not too proud and stubborn to say 'Stop' it is not the right time and instead change to other products. Watch out for new products being added to the Arenel brand," Mr Lepar said.

Industry and Commerce Minister, Mike Bimha said Government was working towards putting stringent measures aimed at protecting local manufacturers from unfair competition that might be exerted by imported products.

"We are in the process of setting up a conformity assessment exercise which will ensure that all imported goods meet specific requirements in terms of safety, health, pricing and this way we will be protecting our manufacturing industry from collapsing," he said in an interview.