THE policy rate increase by the Bank of Zambia (BoZ) from 12.5 to 15.5 percent has raised the cost of borrowing on the market and poses a big challenge to production, says Zambia Sugar head of communication and corporate affairs Japhet Banda.
Mr Banda said the cost of borrowing for Zambia Sugar had gone up due to the raised policy benchmark by the BoZ.
“The Bank of Zambia policy rate increase from 12.5 to 15.5 percent has raised our cost of borrowing,” he said.
He also said the inflationary and related pressures reduced the buying power of sugar from its customers, resulting in low profit.
Mr. Banda also said Zambia Sugar was going through a challenge with regards to the performance of Kwacha as the costs of production inputs had increased.
He said non-tariff barriers continued to define sugar trade in Kenya where administrative measures were impacting negatively on sugar trade.
Meanwhile, Mr. Banda said Zambia Sugar enjoyed a market capitalisation of USD254.5 million as of April 13.
He said during the same period, the company recorded K1.9 billion revenue and domestic sales of 174,000 tonnes as well as regional sales of 159,000 tonnes. “The production capacity in excess of 424,000 tonnes was recorded in the 2015 financial year.
‘‘The company has 6,044 employees compromising of both permanent and seasonal. The activities of the company comprise of cane growing, sugar manufacturing, sugar refining and internal electricity generation,” he said.
He also said Zambia Sugar was configuring a raw mill using existing refinery equipment to produce brown sugar products.
Mr. Banda explained that the company aimed at producing enough brown sugar for domestic and regional markets.