How Zimbabwe listed construction firms are cashing in on growing infrastructure spending

But, it’s not all plain sailing. There are still many bumps on the road, and the biggest one is the government’s poor handling of the exchange rate.

At Turnall, for example, US dollars accounted for 49% of sales. However, these sales had to be converted at the official exchange rate, which was below the open market rate.

“This resulted in lower than anticipated turnover and gross profit margin for the period both in historical and ination adjusted terms,” Turnall said.

For Masimba, the project pipeline may be looking strong, but the company cautions that “the speed of execution of the order book will largely depend on the continued stability of the macroeconomic environment and government policies being consistent”.

High costs are also holding back local companies. According to Lafarge, power makes up 30% of costs. Producers also need coal, which they are buying at US$42 a tonne, compared to US$30 a tonne in South Africa and Botswana. Rail costs in Zimbabwe are US7 cents a kilometre per tonne, eight times more than what producers in South Africa pay, and almost double the charge in Zambia. Road transport is US11 cents per kilometre per tonne, but only US7c in South Africa.

This makes local cement more expensive, leaving local producers vulnerable to cheaper imports.- NewZWire

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