Zimbabwe’s largest brewing company has just changed its payment terms, here’s why

PUBLISHED: Thu, 03 Jan 2019 10:49:00 GMT

JOHANNESBURG (Reuters) – Zimbabwe’s largest brewing company Delta Corporation said on Wednesday that its beverages subsidiary will accept hard currency only from Jan. 4 to protect itself from a crippling shortage of U.S. dollars in the country.

The African country adopted the use of foreign currencies, mainly the U.S. dollar, in 2009 in an effort to tame inflation, but a severe shortage of physical notes has left Zimbabweans watching the dollars in their bank accounts lose value compared with cash.

The move by Delta is the latest evidence of the strain the shortage of is having on businesses, with some shutting up shop and the government taking steps to ensure others remain viable.

The decision means Delta, which is 40 percent owned by Anheuser-Busch Inbev, will no longer accept electronic dollars known as “Zollars” or a quasi-currency known as “bond notes” at its Delta Beverages subsidiary.

In a letter to customers of Delta Beverages posted on Twitter, the company said it did not have enough foreign currency, prompting foreign suppliers, some of which have not been paid for long periods, to cut off credit and new orders.

“Our business has been adversely affected by the prevailing shortages in hard currency, resulting in the company failing to meet your orders,” it said, adding that soft drinks had been out of stock for prolonged periods.

“To sustain its operations, the company advises wholesale and retail customers that its products will be charged in hard currency.”

The so-called bond notes had been introduced by Zimbabwe’s central bank to address the currency shortage, but the value of these has collapsed.

The currency crunch has also caused shortages of basic goods, medicines and fuel, pushing inflation to a 10-year high in November.

Delta said it had invested $600 million in plant and equipment, vehicles and ancillary services since 2009 and that it needs to protect this investment.

“There is need for wider consultation on policy interventions to build consensus and market confidence among stakeholders to stabilise the macroeconomic environment,” it said in its letter.

Reporting by Emma Rumney; Editing by David Goodman

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