PPC feels cash pinch in Zimbabwe
PPC IS working on contingency plans to ensure it can keep its cement operations in Zimbabwe running and pay employees as a shortage of dollars makes it hard for workers to access their salaries and for firms to import raw materials.
While the South African company was still able to access dollars in Zimbabwe, availability was “tightening up’’ and employees were starting to indicate they would prefer not to be paid electronically, said PPC’s chief executive, Darryll Castle, this week.
Zimbabwe, which abandoned its own currency in 2009 and now mainly uses dollars, started adding dollar-backed bond notes into the financial system last week in a bid to reduce a shortage of hard currency that has led to delays of several months in salary payments to civil servants, the military and some private company employees. That sparked protests in Harare.
Electronic transfers are becoming increasingly unpopular as the cash cannot be readily accessed as there are limits on withdrawals from ATMs.
“It hasn’t got to the point yet when people are refusing to accept electronic money but it is a risk,” Castle said. “If Zimbabwe degenerates to a level where people lose complete faith in the banking system, absolutely people are going to want to be paid in a pile of cash at the end of the month.”
In that scenario the company would prefer to work with the government, Reserve Bank of Zimbabwe and private banks to reassure its employees that they would be able to access their funds, he said.
PPC has production capacity of 1.4million tons a year in Zimbabwe, where it employs about 470 people, and commissioned a new mill last month.
While the local market had exceeded expectations in the past year or so, the outlook was less rosy, he said.
“Something’s got to give in that economy,” Castle said.
“I don’t see how a dollar economy works in an importing nation. Eventually you run out of dollars.”