CABLE manufacturer Cafca Limited has highlighted persistent foreign exchange and liquidity shortages as a threat to operations.
The company cited limited convertibility of Zimbabwe Gold (ZiG), which has hampered its ability to secure US dollars needed to import essential raw materials.
This warning comes as Cafca revealed in its financial results for the year ended September 30, 2025 that a substantial portion of its procurement must be settled in foreign currency.
During the period, Cafca reported a fall in profit to US$2,4 million, down from US$7,3 million the previous year.
It attributed the decline partly to Statutory Instrument 157 of 2024, which opened the market to cheaper cable imports.
Consequently, Cafca’s access to adequate foreign currency remains critical to sustaining production and maintaining competitiveness.
“The ZiG currency is not fully fungible in practice, due to factors that limit its interchangeability with other currencies,” Cafca stated in its annual report for the period ended September 30, 2025.
“The main factors are regulatory constraints. Conversions slide largely in one direction — from US dollars to ZiG.”
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While ZiG is legal tender, the US dollar continues to dominate transactions in Zimbabwe.
For businesses such as Cafca, which rely on imported raw materials priced in US dollars, this one-way convertibility makes it difficult to access the hard currency they require. This increases costs, and squeezes profit margins.
“The currency that mainly influences labour, material, and other costs of providing goods or services will often be the currency in which those costs are denominated and settled,” Cafca said.
For the year ended September 30, 2025, Cafca said turnover was generated in both US dollars and ZiG, with US dollar sales accounting for 86% of total revenue.
Therefore, while the company expects to continue earning in both currencies, its reliance on ZiG revenue — which cannot easily be converted back into dollars — compounds the challenge of funding imported raw materials and maintaining competitive operations.
Revenue increased to US$38,7 million from US$24 million recorded during the 2024 financial year.
Despite the rise in revenue, this was offset by an expansion in the cost of sales of about 105% to US$30,47 million during the period under review, from the 2024 comparative.
Additionally, the influx of cheaper, low-priced cables forced Cafca either to reduce prices or absorb higher input costs.
“The company’s ability to continue operating as a going concern may be negatively impacted as it continues to operate in a volatile macroeconomic environment characterised by liquidity constraints and foreign currency shortages,” Cafca stated.
“The company’s ability to acquire imported raw materials is dependent on its ability to obtain adequate and affordable foreign currency.”
Cafca held US$4,48 in current assets for every US$1 of current liabilities as of September 2025, reflecting robust liquidity and a solid capacity to meet its short-term obligations.
