US dollar use in transactions cheers up Delta

DELTA Corporation says increased use of foreign currency for domestic transactions in the country has enhanced its ability to procure imported raw materials.

The beverages maker said in its third-quarter trading update to December 31, 2021 that better access to foreign currency would strengthen the company’s capacity to undertake critical capital investments going forward.

Circulation of US dollars has continued to grow steadily in the domestic economy, benefiting mainly from growing diaspora remittances and companies paying part of their workers’ salaries in United States dollars.

Notably, international remittances encompassing diaspora inflows and non-governmental organisations’ hard currency receipts jumped to US$1, 7 billion compared to US$1,1 billion, as at the end of October 2021, compared to the same period in 2020.

There has also been growing activity in the mining and tobacco sectors whose export proceeds are in US dollars.
The prevailing situation has seen improvement in the quantum of greenbacks circulating in the domestic economy.
The US dollar is regarded as a critical store of value by many since it is rarely negatively affected by inflationary pressures as it does on the local currency.

In the course of the said period, Delta indicated that volume uptake was also pushed by payment of bonuses in USD towards the end of the year, better output from the agricultural sector, and growing mining activity.

The company was however, quick to point out that consumer demand remains constrained under the Covid-19 restrictions, which are undoubtedly inhibiting volume uptake in the domestic market and beyond.

Delta company secretary, Alex Makamure said the healthier performance by some critical areas of the economy like mining, agriculture had availed disposable incomes for consumption by its clientele.

Activity in the construction sector through the ongoing Government-initiated infrastructure rehabilitation programmes has had the same effect on Delta’s performance.

“Consumer spending was spurred by increased mining activity, improved agricultural output, infrastructure projects, and payments of bonuses and salaries in foreign currency.

“The Zimbabwean businesses will continue to benefit from the growth in consumer spending driven by agriculture, mining, infrastructural development, and general commerce.

“Increased use of foreign currency for domestic transactions currency will enable the company to undertake critical capital investments and as well provide the industry with better access to imported raw materials and inputs,” said Mr Makamure.

He also lauded the vaccination drive by the Government citing that it enhanced the basis of a normal trading environment in the economy.

“The rollout of vaccines has lessened the severity of disease and reduced mortality rates, with some countries concluding that the virus was now endemic.

“This allows for a gradual return to normal levels of social and economic activity as people adjust to living with Covid-19,” he said.

In terms of performance in the period under review sorghum beer volumes grew by 25 percent and 50 percent for the quarter and the nine months respectively.

In the sparkling beverages business, Delta registered a strong volume rebound growing by 34 percent for the quarter and 62 percent for the nine months in the comparable period last year resulting in market share gains.-The Herald