By Alois Vinga
LEADING seed producer, SeedCo Limited has blamed government’s delays in paying for commodities as chief among causes prompting an increased appetite for borrowing.
The remarks come at a time when monetary authorities have condemned the practice by some companies which have been in the habit of borrowing to purchase foreign currency on the parallel market, saying such tendencies are huge setbacks to economic progress.
Such realisations prompted government to order banks to temporarily ban lending at the height of increased exchange rate volatility in May this year.
But presenting Abridged Group Audited Results for the year ended March 31 2022, SeedCo Limited said on its part, delays experienced in payment by the government spurred the need to borrow.
“The appetite to borrow more was caused by a mismatch between receipts and payments arising out of delayed payments from the government schemes and a sharp increase in prices for both operating expenses and seed deliveries,” said the company.
As a result, borrowings rose by 35% from prior year historical levels and this was driven by the need to cover the funding gap created by increased grower payment rates, rising operating costs and delayed payments from key customers, including government schemes.
During the period, the group posted a profit of ZW$ 2,107.7 million profit with finance costs standing at 9% of turnover compared to 8% prior year.
Inflation-adjusted turnover was 8% lower than prior year and this is attributable to volume reduction and pricing challenges.
Other income increased when compared against prior year due to exchange gains on intercompany debtors and non-seed sales.
“The unavoidable need to focus on food security and import substitution is expected to spur investment in agriculture in Zimbabwe and on the African continent.
“The group is better positioned to leverage its strong brand and intellectual property to actively participate in enhancing primary food production to plug supply gaps,” added SeedCo.