Powerspeed's Expansion Hindered by Currency Uncert...

Powerspeed's Expansion Hindered by Currency Uncertainty

Oscar J. Jeke- Zim Now Reporter

Powerspeed, the parent company of Electrosales, is expanding its operations but says uncertainty over Zimbabwe’s currency policies is hampering its growth.

The company, which is investing in new retail outlets and a timber processing plant, is struggling to secure long-term financing due to concerns over the future of the multicurrency system, set to expire in 2030.

Powerspeed has been working to diversify its business by introducing Electrosales Timber to tap into the timber market. It has begun trading in timber products and is establishing a processing plant in Mutare to add value to raw materials. While the company sees significant potential in this sector, its overall expansion plans are moving slower than anticipated.

In Harare, Electrosales is constructing new stores, including locations at Westgate and Cardinal Corner. However, a lack of affordable long-term loans is affecting the pace of development.

“Banks in Zimbabwe remain constrained by liquidity challenges, making it difficult for businesses to access funding. Interest rates are also prohibitively high due to the country’s risk perception,” the company stated in its annual report.

“Another problem is the uncertainty over the functional currency and the future use of the US Dollar. This prevents any form of long-term borrowing, which is vital to fund construction and expansion programs.”

With local banks unable to provide sustainable financing, the company has turned to private investors and fund managers. Long-term borrowings rose from US$392,000 in 2023 to US$3.28 million in 2024, with backing from Imara, Msasa Capital, and businessman Grant Hewlett, who have offered loans at 10% interest. In contrast, short-term bank loans remain costly, with rates around 25%.

The company delisted from the Zimbabwe Stock Exchange in 2020, arguing that the market undervalued the company and was ineffective in raising capital.

Its largest shareholders include Careful Investments (18.5%), Mega Market (13.12%), and employees (10.3%).

While the company remains committed to expanding its operations, its ability to fast-track growth will largely depend on a stable currency policy and improved access to long-term funding.