Govt approves CSC turnaround strategy
THE Government has given the Cold Storage Company (CSC) the greenlight to implement its turnaround strategy paving way for the revitalisation of the giant parastatal.
Despite being a strategic industry pillar in the country, the CSC has been making losses and is saddled by debts that run into millions of dollars. Creditors, who include workers, are literally taking turns to attach properties over unpaid arrears.
The CSC management and board had engaged the Government seeking approval to mobilise funding internally through measures such as the disposal of some of its idle assets, which have an estimated value of $4.5 million.
The proposal was made in 2012 but had not been approved pending a forensic audit whose results are yet to be released. Some of the properties earmarked for disposal are in Harare, Kadoma and Gweru.
On Thursday President Mugabe announced that the Bulawayo-headquartered firm was poised for resuscitation, which would impact positively on the livestock value chain.
“Government recently approved a turnaround plan for the Cold Storage Company as part of the programme to revive the country’s beef industry,” said President Mugabe while officially opening the Fourth Session of the Eighth Parliament in Harare.
Agriculture, Mechanisation and Irrigation Development Deputy Minister in charge of livestock Paddy Zhanda is on record saying CSC would be fully operational by December this year.
“Our plans are that CSC should start working and be fully operational before December 2016,” said Deputy Minister Zhanda recently.
“If CSC is fully functional the beneficiaries will be these farmers who will have a market for their livestock. My desire is to see CSC open to business again.”
The company used to be one of the biggest employers in the country and its revival could be a big win for Zim-Asset, the Government’s economic blueprint, in terms of job creation and value addition mainly on the food security and nutrition cluster.
CSC has been suffering from severe under-capitalisation and requires about $83 million to revamp its operations and operate profitably. CSC was established in 1937 in terms of the Cold Storage Commission Act, with the mandate of procuring, processing and marketing beef, lamb, goat and related products. The Government is the sole shareholder in the company that owns three abattoirs in Chinhoyi, Bulawayo and Masvingo.
The firm was commercialised in 1995 and adopted the name Cold Storage Company. It also owns canning and tannery subsidiaries, which are located in Bulawayo.
However, the canning company is not operational because of lack of inputs from the parent company while the tannery is currently under judicial management.
Recent reports have shown that out of a total of about 77 000 national slaughters in the first quarter of 2015, CSC only slaughtered about 5 000, which represents 7.3 percent of the total.
The company has an estimated total national head of about 792 cattle and its dismal performance is attributed to a number of factors, mainly lack of capital. CSC posted a loss of $1.3 million in the first quarter of 2015, a recent Parliamentary report has shown.
The company owes over $28 million to its creditors, mainly to utilities such as Zesa. It owes employees about $3.5 million for wages and has had some of its assets attached by employees over outstanding wages.
The Government has been negotiating with investors such as Alternative Initiation for Development of Africa who had plans to inject capital of $80 million.
CSC also faces severe competition from private abattoirs following the liberalisation of the beef and livestock industry in 1992.
It is estimated that there are over 600 registered and unregistered abattoirs and slaughter poles in Zimbabwe. Prior to liberalisation CSC dominated 50 percent of the market share and by 2002 this had declined to six percent especially after the suspension of exports to the European Union (EU).
The company has a huge infrastructure stock that incurs large overheads costs in the form of electricity and water, which makes CSC uncompetitive against the small private abattoirs. On average, the electricity bill for CSC per month is $35 000 irrespective of the volumes traded while that of a private one is about $5 000.
Cold Storage Company premises in Bulawayo