LG Foods rides on SI 122 scrapping
GROWING food manufacturing and prepackaging firm, LG Foods’ production capacity has improved to around 80 percent buoyed by increased accessibility to raw material following the scrapping of sections of Statutory Instrument (SI) 122 of 2017.
LG Foods managing director Mr Larrence Gwati said the company’s capacity utilisation has moved from about 40 to 80 percent since the Government lifted the import embargo on a wide range of goods last month.
“We are very excited about the Government’s decision to scrap SI 122 of 2017 as it has started yielding positive results to our business. We had a very big challenge in importing (beef) tallow (animal oils), which is a major raw material in the production of soap as we were subjected to paying duty. Now that it’s one of the products included in the import embargo, which was recently lifted, we have managed to increase our production levels and the quality of our laundry soap has tremendously improved as nothing is compromising us now,” said Mr Gwati.
LG Foods imports beef tallow and crude oil from South Africa, which are integral in soap production. Beef tallow is oil for soaping and makes a hard bar with a rich lather. In fact, most soap bought commercially is made from tallow.
The company’s laundry soap, Zim bar has managed to keep prospects of the company’s business afloat in the face of sales and profits from its other products plummeting. The company started soap production last year as part of its diversification drive to grow its business.
Mr Gwati said the company has the capacity to produce about 200 tonnes of soap per month but was being hampered from producing at maximum capacity due to the prevailing foreign currency shortages in the country.
“At the moment we are producing 30 tonnes of soap a month but we have the capacity to produce as high as 200 tonnes but our efforts are being hampered by lack of foreign currency to procure adequate raw materials outside the country. It’s unfortunate that as a small player we don’t have the leverage of being allocated foreign currency by the Reserve Bank of Zimbabwe, which is only the preserve of big players and strategic sectors,” said Mr Gwati.
He also said the lifting of the import ban also enabled the company to boost its production of concentrated syrups. LG Foods are also manufacturers of peanut butter, maputi as well as pre-packers of fine salt, matemba, sugar beans and soya chunks mostly marketed in Matabeleland region and some parts of Midlands. It also does in-house brands for goods destined for its three main wholesale and retail outlets customers.
Mr Gwati, however, said going forward there was a need for the Government to put in place measures of protecting its industry against the influx of cheap imported goods.
“At the moment the country is facing shortages of certain commodities so opening up the borders for imports is justified to fill the gap. However, going forward we have to support our own industry so the onus will be on Government to ensure that manufacturers import strategic raw materials without having to pay duty,” he said.
Mr Gwati applauded the efforts being put by the Ministry of Industry and Commerce of ensuring the growth and revival of the country’s industry.
“We applaud the Government for appointing Ministers that are committed towards the revival of the country’s industries. The fact that (Raj) Modi is the Deputy Minister is truly a blessing to the SMEs (Small and Medium Enterprises) as he has over the years showed significant support to small business players and we believe as long as he is in that position a lot of SMEs are going to realise immense growth,” he said.
LG Foods remains one of the few SMEs in Bulawayo that have managed to weather the country’s turbulent economic environment. The company was started by its proprietor, Mr Gwati as a backyard enterprise in the high density suburb of Cowdray Park in 2005. In 2007 Mr Gwati was to lease a factory shell at Kelvin West Industrial sites and that heralded the growth of his business enterprise.
LG Foods employee Loveness Moyo shows the unpacked green bar soap at the company premises at Thorngrove in Bulawayo on Friday. (Picture by Nkosizile Ndlovu)