Cold Storage Company Bulawayo branch
Prosper Ndlovu, Business Editor
ZIMBABWE is in dire need of investment to boost economic growth and create more job opportunities for its graduates and hundreds of its unemployed people.
It is within this context that capacitating strategic enterprises with a downstream effect on the economy should be given adequate attention.
In this regard serious thought must be directed at resuscitating public entities like the Cold Storage Company (CSC), the National Railways of Zimbabwe, Air Zimbabwe and the Agricultural and Rural Development Authority (ARDA).
In the case of CSC, a lot of pointers indicate the parastatal has huge potential to contribute meaningfully to the economy given its strategic value chain bearing in the manufacturing industry and the broader livestock sector.
Sadly, there seems to be lack of urgency, neglect and slow response to addressing the plight of CSC and positioning it back to profitability.
Recent findings by the parliamentary portfolio committee on lands, agriculture, and mechanisation and irrigation development tell a negative story.
While the board and management of CSC are keen on revamping the operations of the company, the report notes lack of a similar zeal and commitment by the executive. Reference has been made to the collapse of a $57 million potential investment with fears of the same fate on current $80 facility engagements attributed to “lack of interest” in pushing these efforts through by the parent ministry.
The committee has bemoaned the lack of collective responsibility between the board and the parent Ministry of Agriculture, headed by Joseph Made who is supposed to give policy direction in line with section 31 (1) of the Cold Storage Commission Act.
Reports that Minister Made has never held a meeting with the board since its appointment in 2011 are disappointing and perhaps explain why any turnaround strategy for CSC or proposal has a high risk of failure.
Saddled with a legacy debt of about $30 million and litigation cases by creditors that have resulted in loss of critical assets, CSC has lost its capacity to compete with private players to bring sanity in the marketing of meat and related products on the market.
Its demise has given birth to the rise of a cartel that comprises family owned businesses with self serving interests that manipulate desperate livestock farmers to sell their cattle on sub-economic prices.
Nonetheless, CSC still has the potential to create more jobs and wealth, through value addition of the products from the livestock sector, such as leather products and canning of beef and related products.
Its resuscitation will be a big win for the government’s Zim-Asset cluster of beneficiation and value addition. Apparently the executive seems to have neglected its investment into CSC and needs to take urgent measures to address this matter.
It is high time that key players within the livestock sector, such as private abattoirs that are excluded from decision making bodies such as CSC board be roped in to provide their knowledge and skills in enabling the country to re-build the national herd and resume exports to the European Union and elsewhere.
Because of underutilisation due to low capacity utilisation at below 10 percent, the report says CSC infrastructure is deteriorating at an alarming rate.
The firm owns a vast number of movable and immovable properties that are lying idle and run the risk of further deterioration.
In line with President Mugabe’s 10-Point Plan, CSC should be encouraged to venture into a Private Public Partnership (PPP) as a strategy to recapitalisation to obtain full value of its bi-products from the slaughter process, such as hides, heads and hooves, tallow, blood, bones and condemned carcasses.
Private abattoirs are unable to provide some of these services, especially the disposal of blood and condemned carcasses.
Some of these bi-products are critical for the growth of downstream industries, such as tallow which is used for soap manufacturing, hides which are used for manufacture of leather products. The entire value chain has the potential to create more jobs and wealth for the country.
In the past, CSC had access to offshore loans made possible through exports to the European Union.
However, these credit lines were suspended after the foot and mouth disease outbreak in 2001.
The committee was informed that the major advantage that CSC has over private abattoirs is that it has the requisite infrastructure with capacity to export beef to the EU. Currently, there is a huge demand for Zimbabwean beef in the EU market but CSC cannot exploit that.
The committee has recommended the executive to finalise CSC joint venture agreements at least by June 2016 by identifying a partner to avoid unnecessary delays which might cause another investor flight.
Minister Made is urged to convene an urgent meeting with the board and act on the turnaround strategy for the firm and the Parliamentary report to iron out all the issues.
Parliament has also implored the executive to give a time-frame within which to conduct a forensic audit for CSC, which is critical in order to arrest the depreciation in value of some of the company’s assets.
Meanwhile, CSC should be authorised to dispose some immovable and movable assets so as to recapitalise and upgrade the cattle herd in their estates.
This will also improve their bargaining power with the investor.
As a Bulawayo headquartered entity, a revived CSC would assist in the overall turnaround of many downstream industries in the city.