Fertiliser producers reel as forex crisis worsens

LOCAL fertiliser companies require US$135 million in nostro funding to import key raw materials to manufacture 600 000 tonnes of the commodity required this forthcoming summer cropping season, amid fears that the Reserve Bank of Zimbabwe (RBZ) is only availing 30% of needed funds.

By Wongai Zhangazha

Zimbabwe Fertiliser Manufacturers’ Association (ZFMA) chairperson Tapuwa Mashingaidze, who is also the chief executive officer of Chemplex Corporation Limited, this week told the Zimbabwe Independent that fertiliser demand for the 2018-2019 summer cropping season would shoot to 600 00 tonnes from 500 000 tonnes during the previous season, raising concerns that the southern African country will suffer an acute shortage of the commodity.

The projected surge in fertiliser demand, standing at 100 000 tonnes, is driven by an increase in the hectarage put under crops.

“Assuming maximum utilisation of local production capacity, around US$135 million of nostro funding is required to secure raw materials and supplementary imports to supply the full demand of 600 000 tonnes expected for the year.

“Direct allocations from the RBZ have been limited to at best 30% of requirements, mainly for companies with government contracts, hence most of the companies are seeking to open Letters of Credit through the banks but these need internationally acceptable guarantees which are not easy for most Zimbabwe companies to get at the moment,” Mashingaidze said.

Zimbabwe is currently battling a chronic foreign currency shortage which has hampered fertiliser manufacturing companies from importing raw materials, mostly from neighbouring South Africa.

ZFMA is constituted of firms such as Windmill, Zimbabwe Fertiliser Company, Omnia, Fertiliser, Seed and Grain Company and Sable Chemical.