AB InBev Halts Zimbabwe Currency Plan After State Intervenes
(Bloomberg) -- Delta Corp Ltd., the Zimbabwean company part owned by Anheuser-Busch InBev SA/NV, abandoned a plan to only accept hard currency for its beverages after the government intervened a day after the measure was announced.
The maker of Castle Lager, Chibuku sorghum beer and a range of soft drinks hasn’t been able to pay some international suppliers for “extended periods,” choking off access to further credit, the Harare-based company told retailers and wholesalers in a letter dated Jan. 2. Delta, which had planned to implement the measure from Friday, isn’t receiving enough foreign currency from banks to pay for imports, it said.
Still, the company’s refusal to accept alternative securities based on the dollar that are used in the country was illegal, authorities said. A national cash shortage has limited imports of essentials such as fuel and wheat and has caused companies to halt production of everything from soft drinks to gold.
“Delta withdraws the notice to sell its products exclusively in hard currency,” Zimbabwe’s biggest company by market value said in a statement released on Twitter. The letter was signed by the country’s central bank governor, John Mangudya, and Delta’s Chief Executive Officer Pearson Gowero. “The Reserve Bank of Zimbabwe will endeavor to provide the foreign currency required to ensure that Delta continues to trade on the current basis.”
Delta, with a market value of $3.6 billion and 23 percent owned by the world’s biggest brewer, is feeling the effects of a crisis that has its roots in Zimbabwe’s decision to abandon its own currency in 2009 in favor of the dollar and other major currencies. The central bank created electronic money, known as as Real Time Gross Settlement dollars, or RTGS$, to lend to the government and introduced bond notes that it says are valued at par with the U.S. currency. A black market has seen both instruments trade at a discount to the dollar.
“The company doesn’t trade on the parallel or black market and doesn’t subscribe to any exchange rate between the U.S. dollar and the RTGS$ or bond notes, as they’re not currencies,” Delta said on Jan. 2.
Zimbabwe is in the throes of its latest economic crisis, just over a year after President Emmerson Mnangagwa came to power following the ouster of Robert Mugabe. Rampant inflation was triggered by the central bank’s decision in October to order lenders to separate dollars and RTGS$ -- effectively recognizing that the country has two currencies and frightening away already wary foreign investors.
Delta’s attempted measure follows a similar move by Simbisa Brands Ltd., a local operator of restaurants such as Nando’s grilled chicken and South African brands like RocoMamas burgers. It’s offering customers discounts to pay in dollars, though will still accept RTGS$, local cards, mobile money and bond notes.
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