Zimbabwean consumer sector poised for improvement amid rising costs, tax pressures
Image: Tawanda Karombo/Independent Newspapers
Tawanda Karombo
An uplift in volumes has been projected for Zimbabwean consumer companies despite rising cost structures, a volatile policy and monetary environment as well as higher taxation, say analysts at IH Securities.
Hippo Valley, Tongaat Hulett's Zimbabwe-listed unit, reported a 44% downturn in revenues to $191.59 million this month although the gross profit for the year to end March rose 2% to $66.87m.
Another Zimbabwean consumer company, Star Africa Corporation that also trades in sugar, however, raised revenues by 22% over the same period.
Nonetheless, analysts at IH Securities on Friday said in the securities and advisory firm's latest research note on Zimbabwe's consumer sector that they 'anticipate an uplift to volumes for consumer-facing companies this year owing to a likely recovery' in consumer spend.
However, this was against the backdrop of 'general cost structures continuing to be on the rise' corresponding to a 'volatile policy environment and the crystallization of costs' in United States dollars.
'On the demand side, private consumption growth, which had slowed down from 4.8% in 2023 to 2.5% in 2024, is expected to have a rosier year with household spending rebounding by 6.6% in 2025,' said the report.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
After an improved rainy season and prices for minerals such as gold firming up, Zimbabwean consumer firms are well placed for stronger consumer spending.
Companies expected to benefit from this include beer and soft drinks manufacturer, Delta Corporation, which has cited stiffer competition in some beverage categories.
Zimbabwean consumer discretionary spend however remains subdued, with data from Zimstats recently showing average earnings of 55% of the employed population at less than $100.
Worse still, 'job losses within the past 3 months emanated mainly those engaged in agriculture and domestic activities, whilst IT and Electricity sectors had the lowest job' losses.
Moreover, Zimbabwean companies have to absorb some of the legislation-linked costs of production, such as sugar taxes and fast-food taxes, to support volumes.
IH Securities is thus skewed towards consumer-facing stocks that exhibit the ability to generate a significant portion of revenue in US dollar, have good management practices, and are also consistent in paying dividends.
Companies offering defensive staples such as National Foods - in which Tiger Brands has an interest - were displaying volume growth, said the analysts. National Foods' maize division recorded a significant volume growth of 58% in May over the comparative nine-month period, largely attributable to the market dynamics.
Dairy company, Dairibord, saw consolidated volume growth of 14% for its first quarter ended 31 March 2025.
'On the retail front, the past two years have been challenging for formal operators on account of several issues. As per leading retailers, a key impediment to viability has been S.I 81A of 2024, an exchange control act that mandated the selling of goods and services at the official exchange rate,' noted the report.
It further though stated that Zimbabwe's operating environment for companies remained challenging overall, citing key issues such as elevated production costs as well as sporadic operating liquidity squeezes in light of the tightening of monetary conditions.
It mentioned 'emerging cost pressures including the government's recent increase of 19.1% to the diesel levy' as further worsening costs for companies.
Headwinds in Zimbabwe had already affected Hippo Valley, which has had to rightsize its workforce with 1 000 workers expected to be let go by August.
OK Zimbabwe, another prominent retailer battling headwinds, is now undertaking a $30m rights issue to stabilize the company. The retailer has also announced further closures of stores, pointing to a 2025 year that 'remains volatile and fragile, but with a possibility of better performances' by consumer companies.
BUSINESS REPORT
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
9 hours ago
- IOL News
Zimbabwean consumer sector poised for improvement amid rising costs, tax pressures
OK Zimbabwe, another prominent retailer battling headwinds, is now undertaking a $30mn rights issue to stabilize the company. The retailer has also announced further closures of stores, pointing to a 2025 year that 'remains volatile and fragile, but with a possibility of better performances' by consumer companies. Image: Tawanda Karombo/Independent Newspapers Tawanda Karombo An uplift in volumes has been projected for Zimbabwean consumer companies despite rising cost structures, a volatile policy and monetary environment as well as higher taxation, say analysts at IH Securities. Hippo Valley, Tongaat Hulett's Zimbabwe-listed unit, reported a 44% downturn in revenues to $191.59 million this month although the gross profit for the year to end March rose 2% to $66.87m. Another Zimbabwean consumer company, Star Africa Corporation that also trades in sugar, however, raised revenues by 22% over the same period. Nonetheless, analysts at IH Securities on Friday said in the securities and advisory firm's latest research note on Zimbabwe's consumer sector that they 'anticipate an uplift to volumes for consumer-facing companies this year owing to a likely recovery' in consumer spend. However, this was against the backdrop of 'general cost structures continuing to be on the rise' corresponding to a 'volatile policy environment and the crystallization of costs' in United States dollars. 'On the demand side, private consumption growth, which had slowed down from 4.8% in 2023 to 2.5% in 2024, is expected to have a rosier year with household spending rebounding by 6.6% in 2025,' said the report. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ After an improved rainy season and prices for minerals such as gold firming up, Zimbabwean consumer firms are well placed for stronger consumer spending. Companies expected to benefit from this include beer and soft drinks manufacturer, Delta Corporation, which has cited stiffer competition in some beverage categories. Zimbabwean consumer discretionary spend however remains subdued, with data from Zimstats recently showing average earnings of 55% of the employed population at less than $100. Worse still, 'job losses within the past 3 months emanated mainly those engaged in agriculture and domestic activities, whilst IT and Electricity sectors had the lowest job' losses. Moreover, Zimbabwean companies have to absorb some of the legislation-linked costs of production, such as sugar taxes and fast-food taxes, to support volumes. IH Securities is thus skewed towards consumer-facing stocks that exhibit the ability to generate a significant portion of revenue in US dollar, have good management practices, and are also consistent in paying dividends. Companies offering defensive staples such as National Foods - in which Tiger Brands has an interest - were displaying volume growth, said the analysts. National Foods' maize division recorded a significant volume growth of 58% in May over the comparative nine-month period, largely attributable to the market dynamics. Dairy company, Dairibord, saw consolidated volume growth of 14% for its first quarter ended 31 March 2025. 'On the retail front, the past two years have been challenging for formal operators on account of several issues. As per leading retailers, a key impediment to viability has been S.I 81A of 2024, an exchange control act that mandated the selling of goods and services at the official exchange rate,' noted the report. It further though stated that Zimbabwe's operating environment for companies remained challenging overall, citing key issues such as elevated production costs as well as sporadic operating liquidity squeezes in light of the tightening of monetary conditions. It mentioned 'emerging cost pressures including the government's recent increase of 19.1% to the diesel levy' as further worsening costs for companies. Headwinds in Zimbabwe had already affected Hippo Valley, which has had to rightsize its workforce with 1 000 workers expected to be let go by August. OK Zimbabwe, another prominent retailer battling headwinds, is now undertaking a $30m rights issue to stabilize the company. The retailer has also announced further closures of stores, pointing to a 2025 year that 'remains volatile and fragile, but with a possibility of better performances' by consumer companies. BUSINESS REPORT
IOL News
2 days ago
- IOL News
AARTO rollout set for October 2025 in 69 municipalities
The Administrative Adjudication of Road Traffic Offences system will be rolled out in phases according to municipal readiness from October 1, 2025, for the 69 municipalities that are ready for the rollout. Image: Ayanda Ndamane / Independent Newspapers The Transport Department has announced October as the new date for the national rollout of the Administrative Adjudication of Road Traffic Offences (AARTO) system in 69 municipalities. This was announced by Transport Deputy Minister Mkhuleko Hlengwa during the department's budget vote debate in Parliament earlier this week, when he said 69 municipalities will be ready to implement AARTO, and 144 were not yet ready. 'The AARTO will be rolled out in different phases according to municipal readiness from October 1, 2025, for the 69 municipalities, which are ready for the rollout,' Hlengwa said. 'This is Phase 2 of the AARTO rollout programme, while Phase 3 will be rolled out on February 1, 2026, for the 144 municipalities that will only be ready then,' he said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The AARTO Act was confirmed as constitutional by the apex court, and the department intends to use it to change the behaviour of motorists. Hlengwa said research has shown that more than 80% of road crashes were due to human error, and that was why there was a call for behaviour-changing efforts on their part. 'To ensure positive changes in road user behaviour, the department will roll out the Administration and Adjudication of Road Traffic Offences (AARTO) Act, central to which is the demerit system that systematically aims at containing road user behaviour,' he said. The new date for the national roll out of AARTO comes a month after a fake report suggested the imminent roll out of the demerit system that will see motorists lose points for offences and stand to have their driving licence suspended or cancelled should they lose many. In June, the Road Traffic Infringement Agency (RTIA) dismissed any claims suggesting an imminent wider national rollout as incorrect. However, RTIA confirmed that AARTO was currently operational only in Johannesburg and Tshwane. The agency said it was working with the Department of Transport on a draft proclamation of the AARTO Amendment Act. While the draft AARTO regulations have been developed, a selection process towards the appointment of members of the public to serve in the AARTO Appeals Tribunal was at an advanced stage. RTIA also stated that service outlets have been created across the country, and education and community awareness have been ongoing in all nine provinces and on all digital platforms. 'AARTO connectivity of issuing authorities to the e-Natis is under way. Training of the more than 25,000 traffic officers across the country is under way. Preparations to implement the Points Demerit System and the AARTO rehabilitation programme as part of Phase 3 are under way.' According to RTIA, strengthening laws for road traffic compliance was paramount, and the AARTO Act was a vital tool in achieving this. 'Its effective implementation will play a critical role in enforcing these laws and ultimately making our roads safer for all road users.' Meanwhile, the department is moving closer to implementing the 24-hour campaign of visible traffic law enforcement. Hlengwa reiterated the department's commitment to accelerating the implementation of a 24-hour campaign of visible traffic law enforcement across all three spheres of government, aiming to change road user behaviour towards greater compliance with road rules. He said the visibility of law enforcement has proven to be a major contributor to recent achievements in the reduction of road deaths. 'We have thus worked to speed up the resolution of most issues that have delayed the implementation of a 24-hour, seven-day a week and 365 days a year campaign of visible traffic law enforcement,' he said. 'While the country waits for all remaining provinces to finalise their processes and implement a 24-hour shift traffic law enforcement system, the National Traffic Police (NTP) will continue to be deployed to provide support to provinces and ensure greater traffic law enforcement operations across South Africa.' Hlengwa also said the department was reviewing the National Road Safety Strategy that will be submitted to the Cabinet by the end of this financial year. 'The revised strategy will inform engineering interventions, such as the development and promotion of safer road infrastructure designs, safer vehicle technologies, and continuous improvements in traffic management systems. The overall reviewed strategy will include the implementation of stricter traffic laws, vigorous law enforcement operations, and comprehensive road safety education campaigns.' He also said their approach was to improve harmonisation of operations between the three spheres of government through joint planning, inter-agency collaboration, consistency, and shared resources and services throughout the year. 'This will be supported by visible policing through force multiplication and smart deployments on critical routes, focusing on top traffic offences and violations, while intensifying partnerships and collaboration with civil society and media influencers.'
IOL News
2 days ago
- IOL News
Contractors break ground with 1860 Indenture Monument in Durban
Construction work on the 1860 Indentured Workers Monument, situated along Durban's uShaka Beach promenade, has begun. Omie Singh, a businessman from KwaZulu-Natal, visited the site on Friday. Image: Leon Lestrade / Independent Newspapers For a group of senior citizens on a WhatsApp group, a picture of the construction of the 1860 Indenture Monument in Durban means a thousand words. So said Eddie Poonsamy, 66, who lives in North Beach, each time he updates his local temple WhatsApp group and family on the progress made at the site along the uShaka Beach Promenade. Culturalists and stakeholders regard the monument as a step towards honouring the legacy of Indian indentured labourers who first arrived in Durban from 1860. Once completed, the monument is expected to encapsulate their sacrifices and contributions ahead of the 165th commemoration of the arrival of the first indentured workers on November 16, 2025. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Poonsamy, who grew up at the Magazine Barracks in Durban before his family was relocated to Westcliff in Chatsworth, said group members were elated when they saw images of contractors who broke ground at the site. 'I am always on the beach promenade, so when work began, I took pictures and shared them with the groups. Over the years, they had lost hope, but now there has been a keen rise in interest around the monument. The senior citizens in these groups are anticipating the completion of the monument,' Poonsamy said. Selvan Naidoo, director of 1860 Heritage Centre in Durban, said it was a proud moment for him personally, being the great-grandson of Camachee indentured no. 3297, who arrived in Durban in 1864. 'We take great pride knowing that her legacy and that of the other 152,184 indentured workers will finally have their place in telling the history of the South African story, making up all of its people. Unbowed, unwavering, and unflinching, we remain resolute in telling the story of indenture and our Makkal (people) 31 years into South Africa's Democracy,' he said. According to IOL reports, the contractor and artist Brendon Edwards explained that the monument will be eight meters high and will have the names of 684 Indian indentured labourers and the 29 individuals who died on the ship named Belvedere. Edwards said the sugarcane archer will be 684 strands representing the DNA of those who made the trip. This will then come down into the additional bronze, which has now been added, representing the family of the indentured. There will be a pond to symbolise the ocean, water, and the trip they made. Embracing the design is the Zulu nation's kraal, welcoming the indentured. 'The names of our forebears and the story of their journey are important and serve to educate the general public,' said Seelan Achary, chairperson of the 1860 Commemoration Council. 'We are happy to see construction has begun, and we urge the MEC for Arts and Culture to continue to communicate with all stakeholders as was evident at a meeting earlier this year,' Achary said. Omie Singh, president of the KZN International Business Association (KIBA), said he was excited that the contractor had broken ground on the project. Singh said the site's location was in a prominent tourism node and a well-frequented public area. He believed that the monument would be a visual history lesson on Durban's development, both economic and agricultural. 'This monument will give people an educational experience in the role played by the indentured labourers in Durban. The indentured labourers could have sat on this very same sandbank 160 years ago when they were brought across from the Bluff. With this monument, there will always be a conversation and discussion among ordinary people around the arrival of the labourers for decades to come.' Prince Ishwar Ramlutchman Mabheka Zulu said he felt proud that his forefathers, who toiled the soil, would finally be recognised despite the challenges faced with the design. 'This monument serves as a poignant reminder of their sacrifices, struggles, and triumphs. It symbolizes the enduring legacy of the indentured laborers and our descendants, who have become an integral part of our society. 'Our forefathers left behind their homes, families, and familiar surroundings to work in unfamiliar and often harsh conditions. They toiled tirelessly to build our country, contributing to its growth and development,' he explained. Work is under way on the 1860 Indenture Monument along Durban's promenade. Image: Zainul Dawood Eddie Poonsamy at the site where the 1860 Indenture Monument is being built near the uShaka Beach Promenade. Image: Zainul Dawood
