- CAFCA’s sales volumes declined 8% in FY-25 as Statutory Instrument 157 of 2024 opened the market to cheap imported cables, eroding the company’s protected position
- Despite nominal revenue rising 56% to US$39.49 million, profit after tax collapsed 68% from US$5.8 million
- EBITDA halved and dividends were slashed 43% to US 2.80 cents, yet operational efficiencies improved (equipment utilisation +10 pp to 80%)
Harare- Zimbabwe's only listed cables manufacturer, CAFCA has faced a challenging fiscal year ended 30 September 2025, marked by an 8% year-on-year decline in volumes that reflects the vulnerabilities of local industries to regulatory shifts and import pressures.
The implementation of Statutory Instrument 157 of 2024, which permitted competitive products to enter the market under an Open General Import Licence without individual permits, directly contributed to this downturn, eroding CAFCA's market position and highlighting how policy liberalisation can inadvertently favour foreign competitors over domestic producers.
Despite these headwinds, the company demonstrated resilience in nominal terms, with revenue surging 56% to US$39.49 million, largely propelled by exchange rate fluctuations and inflationary effects, though real-term revenue dipped by 3%, reflecting the underlying strain on operational fundamentals.
In response to intensifying competition, CAFCA adopted a defensive strategy aimed at safeguarding its market share, which involved absorbing rising costs rather than passing them onto customers, a move that, while strategically sound for long-term positioning, exacted a heavy toll on profitability.
This approach led to a 50% plunge in EBITDA, compounded by investments in advanced technologies and process enhancements to boost efficiency, as well as the liquidation of slow-moving consignment stock from export distributors to unlock working capital.
The ripple effects were evident in the bottom line, with profit after tax plummeting 68% from US$5.8 million to US$1.9 million, a stark illustration of the trade-offs between volume preservation and margin erosion.
Equipment utilisation, however, improved from 70% to 80% through predictive maintenance and operator-driven controls, signalling operational improvements that could lay the groundwork for recovery, even as power supply edged up by 2% amid ongoing efforts to install a 1.18MW solar plant for greater energy independence.
Segment-specific dynamics further illuminate CAFCA's operational landscape, with the tobacco selling season providing a much-needed lift in the second half of the year, though insufficient to reverse an overall 4% volume contraction when viewed holistically.
Long-standing ties with key utilities such as ZESA and the Rural Electrification Fund offered some stability, yet demand in this segment still fell 8%, exacerbated by liquidity constraints from Zimbabwe's contractionary monetary policy.
The board's declaration of a final dividend at US$2.80 cents per share, down from US$4.9 cents the prior year, reflects a cautious approach to capital distribution amid these pressures, prioritising balance sheet health over aggressive payouts.
As Zimbabwe's sole ZSE-listed cable manufacturer specializing in transmission and distribution solutions for infrastructure, industrial, and commercial sectors, CAFCA remains a pivotal player, but its performance continues to oscillate with regulatory tides, thriving under import curbs and struggling during liberalization phases like 2025.
Looking ahead, the broader economic context reveals a systemic issue of real-sector cannibalisation in Zimbabwe, where formal businesses like CAFCA are disproportionately targeted by policies that, whether by design or oversight, enable unchecked imports to undercut local production.
This is no accident; laws crafted by policymakers shape the terrain, and the relaxation of import controls has repeatedly hampered CAFCA's ability to leverage its installed capacity, which could otherwise satisfy both domestic and regional demand. Factors such as antiquated machinery, subdued demand, and elevated input costs have compounded the challenge, yet CAFCA's strategic national importance cannot be overstated, localising cable manufacturing positions Zimbabwe favourably for regional industrialization surges.
By modernizing its plant to achieve efficiencies and economies of scale, the company can reduce costs and ramp up volumes, while strengthening direct market access through favourable trade terms with customers would mitigate supply chain vulnerabilities inherent in external sourcing.
Ultimately, preserving assets like CAFCA demands a balanced regulatory framework that fosters competition without sacrificing domestic capabilities, ensuring the firm not only survives but thrives in an increasingly interconnected African market.
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