adminConrad Mwanawashe Harare Bureau
Millers have written a petition to the government resisting Tanzanian Bakhresa Group’s $19 million bid to acquire a 75 percent stake in agro-processor Blue Ribbon Industries saying the sector is one of the 14 sectors reserved only for locals.
The Bakhresa/Blue Ribbon deal, currently under Cabinet consideration, has torched the ire of millers as the foreign investor is proposing to defer implementing indigenisation plans until after 10 years of operations, among other reasons.
Empowerment laws put a cap on foreign-ownership in local companies at 49 percent. This means that Bakhresa requires government permission to acquire 75 percent stake of Blue Ribbon.
Our Harare Bureau is reliably informed that millers believe that if Bakhresa is allowed such an arrangement, this could set a wrong precedent as other investors in the sector may also seek to defer empowerment plans.
This could mean there will be no indigenisation in the sector for the next 10 years. Employees may also have to wait for more than 10 years to benefit from empowerment plans.
“We kindly request you to approach the government of Zimbabwe and register on our behalf opposition to the proposed acquisition of Blue Ribbon Industries on the following grounds; its proposal to comply with indigenisation after 10 years in a sector 100 percent reserved for indigenous people is simply a travesty of justice and unacceptable. If granted by our government, it’ll simply mean that indigenisation compliance in the milling sector (and possibly entire economy) is also suspended for 10 years,” millers wrote to their chairman early this month.
Millers also argue that the milling sector is one of the 14 sectors reserved for locals. The millers further argue that the judicial manager could have taken a queue from the Lobels Bakeries deal which allowed local financial engineering without selling the controlling stake to foreign capital.
“Lobels had a debt overhang of $19 million but creditors came up with a scheme of arrangement that saw the same creditors restructuring the company and injected additional working capital and equipment without inviting the foreign investor,” the millers argued.
Grain Millers Association of Zimbabwe national chairman Tafadzwa Musarara said millers have petitioned his office to oppose the Bakhresa/Blue Ribbon arrangement.
“I’ve received concerns from millers over the deal. I’m currently consulting our members and will advise of our position in the New Year,” said Musarara.
Blue Ribbon resumed operations under judicial management following a breakthrough through a supply agreement for raw materials.
The company had been closed since 2012, weighed down by huge debts and failure to attract fresh capital.
Blue Ribbon has five divisions which are currently operating on a reduced scale.
The Bakhresa Group has footprints in Tanzania Uganda, Mozambique, Kenya, Malawi, Seychelles, Burundi, Rwanda and Zambia.
Blue Ribbon requires close to $40 million to bring the ailing heavily indebted company back to full production capacity.
Online Reporter