EDITORIAL COMMENT: NSSA should speed up CSC investment deal Cold Storage Company premises in Bulawayo
Cold Storage Company premises in Bulawayo

Cold Storage Company premises in Bulawayo

The Cold Storage Company (CSC) is one of the economy’s most strategic assets.  Its meat processing capacity is the biggest on the market as it has abattoirs in Bulawayo, Masvingo, Kadoma and Chinhoyi.  

As well as large ranches in almost every province, the CSC has retail outlets in many towns and cities. This therefore means that the CSC is represented at every stage of the value chain, from the farm to the fork, so to speak. The company used to handle up to 150 000 tonnes of beef and associated products per year. Of that output, 9 100 tonnes were exported to the European Union (EU) on a yearly quota, earning the parastatal at least $45 million yearly.  Then, it employed 1 500 permanent workers and an average 700 casual workers.

However, the meat processor has become a shadow of its former self. Its fortunes started to decline around 2001 when its lifeline EU market was closed after that regional bloc imposed sanctions on the country. Recurrent outbreaks of livestock diseases worsened the CSC’s viability. By October last year, the former biggest beef processor on the continent was saddled with a $22 million debt and owed workers $2,1 million in outstanding salaries.

The parliamentary portfolio committee on lands and agriculture learnt recently that two of CSC’s abattoirs were not working. Also of the 8 533 head of cattle that were on its farms by May 2015, only 792 belonged to the company, while the larger part of the head was owned by tenant farmers. In the first five months of that year, the CSC slaughtered 5 600 animals only, which was a measly 5,8 percent of the cattle killed by meat processors over that period nationally.

The situation may have worsened since September 2015 when the parliamentary committee presented its findings to the august House, or it may have actually worsened.

Either way, conditions at the CSC are worrying and new investment is desperately needed to position the company on a recovery path. A viable CSC is good for the beef value chain. A viable CSC is good for the entire economy. This is why there have been efforts by the Government, working with the CSC management to make sure it recovers its status in the economy. A turnaround plan was tabled a few months ago, proposing the unbundling of the company into three units as a way to attract the $90 million required to resuscitate CSC. The Bulawayo abattoir and its farms were to operate independently, the same for the Masvingo and Chinhoyi slaughter and processing houses and their farms.

We are unsure what has become of that proposal.

But the key to the resurrection of CSC might come from the National Social Security Authority (NSSA), a very unlikely source of funding for the agro-processing entity. As we reported yesterday, NSSA is hopeful that a deal for it to snap up a substantial shareholding in CSC would materialise by the end of next month.

“The ultimate goal is to make this national asset work again and we are confident that the deal, which is being evaluated on purely commercial merit, will give meaningful returns to pensioners. For us, the meat industry is important and very strategic,” NSSA chairman Mr Robin Vela said.

It is believed that NSSA would pump in an as yet unspecified sum of money into CSC in exchange for a shareholding. We urge NSSA, CSC and relevant government ministries to move with speed so that the deal succeeds. Since the CSC started seeking new investment, it was apparent that management was looking abroad for the rescue package. The market also thought likewise, which is why we noted earlier that the NSSA interest was a bit of a surprise for an authority that has tended to focus its investments on real estate, equities and so on with little to no interest in agriculture.

Indeed NSSA’s investment approach came under fire two years ago with the Minister of Public Service, Labour and Social Welfare, Prisca Mupfumira, under whose stewardship the parastatal falls, demanding more investment into sectors with a broader socio-economic impact, such as agriculture.

NSSA appears to have heeded that call.

“Our new executives, together with the board, are in the process of re-examining the organisation’s investments approach in order to maximise returns for pensioners and other beneficiaries,” NSSA chief social security officer Mr Henry Chivora told our sister paper, The Sunday Mail in August last year.

“Certainly agriculture being a key driver of economic development and empowerment is high on the priority list. Though we haven’t yet come up with the actual figure (agricultural funding) due to new developments in the company. Concerted efforts should be directed towards sustaining sectors like agriculture to generate more revenue and employment and NSSA should play a role in assisting the Government to achieve this objective.”

We are grateful for this change in focus and more specifically, the planned investment in CSC.

NSSA has the financial capacity to provide the much-needed funding to revive the CSC. We have no doubt that CSC would be a great investment for NSSA as an organisation and for workers who contribute their hard-earned money to the authority. It would be a great investment for the livestock sub-sector as well, and the agriculture industry as a whole.

CSC always has potential. Demand for meat and meat products is always high as long as the products are processed property and come at the right price.

CSC has a national foot print that any investor would find irresistible. CSC is a from-the-farm-to-the-fork entity which any investor would find irresistible.

We therefore urge the relevant stakeholders to make this deal happen as soon as possible.

You Might Also Like

Comments