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Martin Kadzere
BOKA Investments is taking a strategic step to capitalise on the anticipated economic boom from the Mbudzi Interchange project through remodelling its business structure by venturing into commercial retail sector.
Boka plans to build a shopping mall on the site of its existing tobacco buying facility, the company said in a statement to The Herald Finance & Business this week.
The Mbudzi interchange is a multi-million-dollar project expected to significantly improve traffic flow around the Mbudzi roundabout, a notoriously congested area.
The improvement is expected to reduce travel times with a more efficient traffic flow.
Travel times between Harare’s central business district, the southeastern suburbs, and areas beyond will be reduced.
This will make Boka’s location more accessible to a wider range of potential customers. The improved traffic flow will also lead to a significant increase in the volume of traffic passing by the proposed mall.
“The increased traffic is expected to translate to a larger pool of potential customers for the planned shopping mall,” reads the statement in part. “Accessibility and increased traffic volume are expected to benefit not just Boka, but also nearby businesses.”
This would create a more vibrant commercial environment, potentially attracting a wider variety of tenants. The firm added that the decision to forgo applying for a tobacco auction license for the past two seasons was a strategic one.
“After recognising the inevitable inconvenience caused by the construction of the interchange, the company opted to avoid disrupting operations and customer base during this period. However, by venturing into the shopping mall, we are positioning to capitalise on the long-term benefits of the improved traffic infrastructure.”
Boka could not provide specific timelines for the project’s completion, but initial civil works have already begun. Some property analysts have applauded the location as a strategic choice for the shopping mall, pointing its strategic value for the development.
Boka, however, remains involved in the tobacco value chain by providing warehousing facilities through Boka Tobacco Floors, currently under corporate rescue.
The potential resumption of Boka Tobacco Floors participation in the auction business is contingent upon, firstly, a future increase in the volume of free-funded tobacco crop, and secondly, the completion of the Mbudzi interchange project.
Assuming all other relevant factors remain constant, Boka Tobacco Floors is considering re-applying for a tobacco licence next year. Mr Bulisa Mbano of Grant Thorton Zimbabwe was appointed the corporate rescue practitioner.
The decline in self-funded tobacco, coupled with the decentralisation of buying facilities, has led to a significant drop in tobacco sold through the auction system.
The local tobacco industry has seen a significant shift in recent years, with contract farming schemes now accounting for roughly 93 percent of all tobacco production.
The schemes typically involve companies providing financial support and technical expertise to farmers in exchange for their crop. The model has led to the establishment of decentralised buying facilities located closer to major tobacco-growing regions.
This has contributed to the decline in tobacco sold through traditional auction system.
Meanwhile, efforts are underway to increase local funding to sustain the auction system for effective price discovery mechanisms, ensuring the country receives maximum value from its tobacco exports.
The focus on local funding aims to strengthen the long-term sustainability of the auction system, a crucial aspect for both farmers and the national economy.
Online Reporter