By Kingston Ndabatei
THE government has reacted angrily to an announcement by the country’s second biggest tax contributor, beverages manufacturer Delta, that it will begin selling its products in hard currencies beginning Friday describing the decision as “illegal.”
Delta’s decision comes barely weeks after another conglomerate, Simbisa brands which operates a variety of fast foods outlets, also indicated it would begin charging in foreign currency.
Companies say they have no choice but to charge in US dollars because they are not getting foreign currency from the monetary authorities for to meet their import requirements.
However, responding, Industry and Commerce Minister Mangaliso Ndlovu late Wednesday did not mince his words in a statement to State media.
“We have noted with concern a proliferation in the number of companies and businesses engaging in preferential currency practices,” Ndlovu told the government controlled The Herald newspaper.
“This is not only against the spirit of fairness, but it is also an illegal practice.
“Government is very clear that this practice is unacceptable and has to stop forthwith and if not, the law will take its course.”
Ndlovu said local companies were taking advantage of government’s benevolence in allowing an open market economy with little interference from the State.
“The government has supported business to operate liberally within the economy without interference but giving an intervening hand whenever it has been called upon to assist. In return, government has expectations that business will operate in good faith and responsibly,” the Cabinet Minister argued.
“At the centre of the relationship between government and business is the spirit of engagement and a two-way communication between all parties.
“That spirit is defeated when one of the parties decides to unilaterally pronounce decisions against both the text and spirit of agreed principles.”
Explaining the decision, Delta company secretary Alex Makamure said the business had been “adversely affected” by shortages of foreign currency, which had resulted in the company failing to meet orders, and “in the case of soft drinks, being out of stock for prolonged periods”.
The company said government’s new monetary policy regime announced late last year had not made it “easy (for business) access to foreign currency by non-exporters”.
“The company has only received limited foreign currency allocations from the banking channels, which have not been adequate to fund the import requirements.
“Resultantly, all our foreign suppliers are unable to continue providing credit or meet new orders as some of them have not been paid for extended periods.”
The company says it requires $2 million per month to buy raw materials such as concentrates, and granules used to manufacture plastic bottles used in packaging.
Minister Ndlovu called for consultations with industry amid reports he had summoned Delta executives to a meeting on Friday.
“I have seen it (the letter to customers advising of new pricing structure) but I think we should be meeting them on Friday. That cannot be allowed,” said Ndlovu.