Star Africa Corporation says Zimbabwe's highly informal economy, tax policy and cheap imports remain major obstacles to growth, even as the sugar producer returned to profitability after a difficult 2025 financial year.
The company made the remarks in its abridged results for the year ended March 31, 2026, after reporting a turnaround from a US$4.8 million loss to a profit after tax of US$1.4 million.
Operating profit also improved to US$1.1 million from an operating loss of US$3 million recorded a year earlier, despite group turnover declining 9% to US$58.1 million.
The recovery was driven by lower foreign exchange losses, cost-cutting measures and stronger performance in the second half of the financial year.
However, the company said significant structural challenges continue to weigh on Zimbabwe's formal manufacturing sector.
"The informal market remains a significant challenge, with an estimated 76% of operational businesses remaining unregistered, creating operational, financial and compliance bottlenecks for formal manufacturers."
Star Africa also highlighted policy-related challenges affecting the sugar industry.
"Ongoing challenges regarding the VAT classification of white sugar and the implementation of the sugar tax continue to adversely impact performance."
The company said grey imports remain another threat to local manufacturers, forcing formal businesses to compete with cheaper imported products.
"Cheap imports remain a persistent threat, though the company is actively mitigating this through competitive pricing and agile market responsiveness."
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It also warned that the increasing use of sugar substitutes could affect future demand unless a clear regulatory framework is introduced.
"The rising use of sugar substitutes poses a risk, particularly as the regulatory framework governing their use remains outstanding."
Despite these challenges, Star Africa said Zimbabwe's improving macroeconomic environment had created more stable operating conditions.
Management said tight monetary policy by the Reserve Bank of Zimbabwe had helped stabilise the Zimbabwe Gold (ZiG) currency, resulting in single-digit inflation and a more predictable business environment.
The company noted that Zimbabwe's economy is estimated to have grown by 6.6% during the period, supported by improved currency stability.
Operationally, Star Africa said Goldstar Sugars maintained sales volumes of nearly 60,000 tonnes, supported by strong demand from beverage and confectionery manufacturers, while Country Choice Foods recorded a 63% increase in specialty product volumes after improving its distribution model.
Rental income from the group's property portfolio increased 9% to US$389,264, while profit from its associate company almost doubled to US$655,422.
Star Africa said it expects volumes to grow in the coming financial year as it benefits from business reorganisation, improved efficiencies and investment in production.
The company is also exploring export opportunities in the region.
However, it said preserving cash remains a priority, with the board deciding not to declare a dividend for the year.
"The focus remains on reinvesting in the business to sustain long-term growth and shareholder value."
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