HARARE: THE National Bakers Association of Zimbabwe (NBAZ) says its members require a minimum of $150 million working capital. The association has a membership of about 260 people.
“In terms of the performance of the bakery industry, the sector has been able to meet the demand on the market. But we still need capital expenditure ranging between $150 million and $200 million,” said NBAZ president Givemore Mesoemvura.
He said some players in the bakery industry recently managed to retool after securing loans from local banks. “We’ve some of our members especially big bakeries who have managed to retool using loans from the local banking sector. Some have also secured funding from the Distressed Industries and Marginalised Areas Fund.
“A majority of our members are still struggling to secure working capital because lending rates from local financiers are punitive,” Mesoemvura said. For example, he said, most of the banks were charging lending rates as high as a minimum of 22 percent.
“Such rates are punitive as our members still don’t have the capacity to service the loans. It would be desirable to have lending rates pegged at 12 percent per annum,” Mesoemvura said.
A number of NBAZ are presently operating at below 60 percent capacity due to other challenges such as competition from leading operators as well as subdued demand. “Competition from large and well established bakeries is also threatening the performance of small bakeries; it’s really tough for small players,” said Mesoemvura.
The bakery industry employs 3,500 people and has shown downstream value chain effects that accrue to farmers, yeast and fat producers, millers and the government through fiscal revenues. The sector has a potential to spur industry and agriculture growth, employment creation and consumer satisfaction.
At its peak, the bakery industry employed more than 6,000 people and utilised over 400,000 tonnes of wheat supporting local farmers and millers. In 2014, bread output grew by over 20 percent mainly driven by capacity revamping and expansion of local bakeries.
