Star Africa calls for tight monetary policy, income up 30%

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By Alois Vinga

LISTED sugar producer, Star Africa Corporation Limited (SACL) has implored authorities to sustain the current tight Monetary Policy stance for the markets to achieve more stability on the back of the company’s record 30% increase in revenue.

During the year’s first half, the Reserve Bank of Zimbabwe (RBZ) employed several strategies which included hiking interest rates to block speculative borrowing, introducing excess liquidity mop-up instruments and cutting back on all money supply risk factors.

Resultantly the ZWL has relatively stabilised with the exchange rate market remaining calm for most of the year’s second half.

Presenting the group’s performance for the period ended March 31 2023, SACL chairman, Doctor Rungamo Mbire hailed the positive impact of the measures amid calls for a sustained tight policy stance.

“The Zimbabwe Dollar has regained value after a steep depreciation in June 2023. The tight monetary and fiscal policies enacted in May 2023, if maintained, are expected to bring more stability to the market.

“The global economic outlook continues to be weighed down by interest rate hikes by most central banks and the negative spill-over effects from the Russia- Ukraine conflict,” he said.

During the reporting period, SACL recorded a 30% increase in turnover from ZW$38,5billion in the prior year to ZW$50 billion largely attributable to strong demand for all of the group’s products.

However, the group’s operating profit shrunk by 93%, from ZW$5 billion in the prior year to ZW$ 0,4billion due to increases in raw sugar prices and operating costs in real terms.

Increasing global inflationary pressures also resulted in a spike in the costs of imported chemicals, packaging and refinery spares.

During the period, sales volumes of granulated sugar produced by Gold Star Sugars were stagnant, having been 82,500 tons sold in the prior year to 82,321 tons on the back of pressure from imports after the promulgation of Statutory Instrument 98 of 2022.

Country Choice Foods products continued to dominate the market on the back of competitive pricing which has positioned the unit’s products among the most affordable in the market.

Consequently, sales volumes increased by 9%, from the prior year’s 1,879 tons to 2,048 tons.

Revenue performance for the properties business improved significantly with ZW$337,5million of rental income being recorded, compared with ZW$162,2 million in the prior year.