Nigeria Finance

Sep 18 2018

Cooking oil firms raise alarm over dwindling forex, The Financial Gazette, forex crunch.#Forex #crunch

Cooking oil firms raise alarm over dwindling forex

Forex crunch

Forex crunch

Oil Expressers Association of Zimbabwe president, Busisa Moyo

THE country’s edible oil producers have said they are only getting 30 percent of their foreign currency requirements from official allocations, but insist the country has adequate stocks of the basic commodity.

Current cooking oil shortages are linked to the foreign currency crunch, but panic buying was blamed for fuelling the crisis. In a statement this week, the Oil Expressers Association of Zimbabwe (OEAZ), which represents seven major producers controlling 95 percent of the market, said foreign currency allocations to its members had dropped from 44 percent of requirements in the first seven months of the year, to just under a third of total needs currently.

“OEAZ members require at least $5 million per week ($20 million per month) to import soya beans, crude edible oils and other materials to satisfy national demand for oil and related products For the 28 weeks ended 31 July 2017, OEAZ members have received $61 million which is $2,2 million per week ($8,8 million per month) which is 44 percent of what the sector requires to satisfy national demand. “In the last two months, foreign currency allocations have been further constrained to less than $1,5 million per week (i.e. 30 percent of the sector’s actual foreign currency allocation requirements).

This is possibly linked to reduced tobacco sales inflows,” said OEAZ in its statement. More worrying, said the oil producers, was the fact that the prevailing foreign currency allocations “mean that OEAZ members’ credit lines for raw materials have now reached maximum levels and members can no longer access raw materials on credit from foreign suppliers as they normally do”. The oil manufacturers have suggested that the Reserve Bank of Zimbabwe (RBZ) should immediately increase foreign currency allocations to the sector or extend Letters of Credit to OEAZ members that would enable them to import more raw materials.

The association has also indicated that input and raw material costs have “escalated dramatically in the last few months” leading to upward price adjustments. “The poor liquidity and scarcity of foreign currency has meant that fast-moving consumer goods such as edible oils have become a substitute for cash as a store of value to the informal trade and fuelling higher demand and price inflation,” said OEAZ. In a separate statement, one of the OEAZ members, Surface Wilmar, said the prices of its products had not changed and implored retailers to sell its products at recommended prices.

“Cooking oil has been classified by the RBZ as a basic commodity and therefore receives priority on forex allocations. This should ensure our customers and consumers on the continued availability of our products on the shelves. The current panic buying and hoarding only serves to distort the perceived availability, but we are assured that this is only a short term phenomenon,” said Surface Wilmar in a statement.





Written by admin


Leave a Reply

Your email address will not be published. Required fields are marked *