Foreign currency shortages derail Paramount Garments

Published: 06 October 2019
LEADING textile firm, Paramount Garments' exports have dropped by 14 percent while prospects of growing its Bulawayo clothing manufacturing unit, Archer Clothing Manufacturers are in limbo due to adverse foreign currency shortages.

Paramount Garments managing director Mr Jeremy Youmans told Sunday Business that the company's going concern status was under threat owing to numerous constraints faced by its Bulawayo operations.

"Our export sales are down 14 percent (compared to the same period last year). This is mainly due to the capacity constraints in Bulawayo and the need to limit debtors to debt exposure," he said.

Paramount Garments operates 41 production lines in Harare and Bulawayo and plans are underway to put an additional 10 lines at the latter depending on the performance of the economy. Since creditors of Archer Clothing Manufacturers approved its take-over by Paramount Garments in 2015, consequently saving it from liquidation, the firm has been one of the country's most successful stories of a company that was forced to close shop due to the effects of hyper-inflation but managed to come out of the woods to attain profitability in the shortest period of time.

However, last year the company, which had projected to employ 850 people by 2016 hit an all-time low and was forced to retrench 200 of its more than 500 workforce due to insufficient electricity supply to power its factory and continuous shrinking of its local market. The company expects to address its power challenges before the end of this month.

"We have commissioned the new generator. We should be finalising the internal infrastructure within the next two weeks and the transformer for Zesa (Holdings) has arrived in Bulawayo. So during October we should be able to have everything up and running," said Mr Youmans.

He, however, said the improved power supplies at the factory was unlikely to immediately result in turning around the company's fortunes.

"We have not, and will not in the future, be able to grow and employ the extra people if we cannot fund the raw materials needed to be value added. So, until the situation is improved, we will be constrained in what we can do," said Mr Youmans.

He said the company remains constrained in importing strategic raw material due to lack of adequate foreign currency, further stating that it has hardly received any allocation from the Reserve Bank of Zimbabwe. He said the company's depleted foreign currency coffers were stifling its strategy to grow its business.

"We have plans to further develop Archer by up to another 1 000 people but we can't do this without having surplus foreign currency. We are also pursuing the development of the leather factory in Bulawayo and still hope to grow this significantly," said Mr Youmans.

The company ventured into leather production in November 2015 as part of a diversification strategy aimed at expanding its business. Paramount Garments exports its textile products in the region, Sudan, Kenya and Germany and has set sights on exploring the West African market.

"We are pushing into the region more and also trying to get into West Africa," said Mr Youmans.
- sundaynews
Tags: Forex,


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