Deadline set for CSC revival

Prosper Ndlovu recently in Nkayi—
THE Cold Storage Company (CSC) will be “fully operational” by December as the Government moves to implement the turnaround strategy for the ailing Bulawayo-headquartered 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. Creditors, who include workers, are literally taking turns to attach properties over unpaid arrears.

Agriculture, Mechanisation and Irrigation Development Deputy Minister in charge of livestock Paddy Zhanda on Friday said he was confident that CSC would take off again and impact positively on the economy.

“Our plans are that CSC should start working and be fully operational before December 2016,” said Deputy Minister Zhanda while addressing livestock farmers in Ngwaladi area, Nkayi North.

“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 and its turnaround strategy has been approved.”

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. Deputy Minister Zhanda could not disclose the details of the strategy but said there was no going back on revitalising the firm and ensuring that it impacts positively on downstream industries.

The CSC management and board are on record saying their turnaround proposal includes mobilising funding internally through the disposal of some of its idle assets.

The assets have an estimated value of $4.5 million. The proposal was made to the Government 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.

Small to Medium Enterprises and Cooperative Development Minister Sithembiso Nyoni, who is area MP and attended the event, concurred with Deputy Minister Zhanda saying efforts to revive the firm would bear fruit.

“We’re very excited about development at CSC and if it’s revived my constituency here will be part of the beneficiaries,” she said. 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 a canning and a tannery subsidiaries, both which are located in Bulawayo, its headquarters. 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 a 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 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.

Moreover, most private abattoirs are located on farms and pay lower rates to Rural District Councils (RDCs) whereas CSC operations are located in major towns where urban authorities have higher tariffs than RDCs.