Zimbabwe’s biggest flour producer to close mills due to foreign currency shortage

05-Dec-2018 - Last updated on 05-Dec-2018 at 10:00 GMT

Ten billion dollars, fifty billion dollars, even fifty trillion dollars - some of the Zim's banknotes after hyperinflation. Pic: ©GettyImages/swisshippo

National Foods – one of the largest food manufacturers in Zim – is closing two of its mills in Harare and Bulawayo, citing foreign currency shortages.

The company – jointly owned by Tiger Brands (South Africa’s largest food company) and Harare-listed Innscor Africa (which also runs a bakery and confectionery unit) – announced it will be shutting the mills doors because it had been unable to pay its suppliers due to a crippling shortage of foreign currency.

Zimbabwe – which abandoned its own currency in 2009 to use a basket of currencies mostly led by the US dollar – is in a serious economic bind, with food, foreign currency, fuel and medical supplies in short supply.

The closure of the company’s flour mills comes despite the government confirming the country has enough stocks of wheat to cover the next four months.

Information, Publicity and Broadcasting Services Acting Minister Mangaliso Ndlovu said Zim’s wheat supply was now stable.

Bread shortage

However, the indefinite shutdown of the milling operations is expected to further affect the country’s supply of bread, already in the balance with a recent price hike from $1.10 for a standard loaf to $1.50.

In a letter to stakeholders, Michael Lashbrook, CEO of National Foods, said the two facilities will still mill the limited stock of wheat it has in the works, but anticipated shutting operations within a few days.

“As you are well aware, the nation has been facing foreign currency shortages for some time. As a consequence, National Foods has faced difficulties in settling its foreign wheat suppliers,” said Lashbrook.

‘Due to delays … our wheat suppliers have instructed National Foods to cease draw-down of wheat stocks.

“Our suppliers regret having to take this position but have themselves reached the point where they cannot fund their businesses,” he said.

Lashbrook added National Foods is working with the country’s authorities to resolve the foreign payment issue.

“We would like to reassure you that we have a full pipeline of both imported and local wheat booked and that once payment is made, we will immediately restart milling operations,” he said.

Apart from its maize and flour milling operations, National Foods produces snacks, poultry products and edible oils.