Council breweries hit hard times

Source: Council breweries hit hard times | The Financial Gazette March 16, 2017

BREWERIES run or owned by local authorities have hit hard times largely due to poor management and corruption, the Financial Gazette’s Companies & Markets can report.
Information gathered indicates that most of the breweries have been perennial loss makers and failed to turnaround despite an improvement of national economic fortunes in 2009.
The breweries have either folded or are operating below capacity, with proposals to privatise them now dominating council meetings.
These include Harare City Council’s Rufaro Marketing, Bulawayo’s Ingwebu Breweries; Gweru’s Go-Beer Breweries, Mutare’s Pungwe Breweries, Kwekwe Breweries, Kadoma Liqour Marketing and Kaiwaza Breweries owned by Nyanga Rural District Council (RDC) among others.
The majority of the breweries predominantly manufacture so-called opaque beer.
Nyanga RDC has since shut down its loss-making beer entity owing to perennial losses.
Nyanga RDC chief executive officer Zefania Jaravaza said they chose to close Kaiwaza as it threatened to drag council into a severe financial crisis.
“The council came to a decision that we should close down the brewery. It has been running at a loss and the general understanding was that if we continue to let it operate, it would further run down its parent company, which is the council,” he said.
“The brewery owes its workers wages for three months. It also owes the Zimbabwe Revenue Authority (ZIMRA) a sizeable amount in unremitted taxes. The entire debt is over US$30000,” he said.
ZIMRA is the tax collection agency for government.
Mutare city fathers have also proposed to shut down Pungwe Breweries, which has been making losses for the past 15 years.
The city fathers feel that Pungwe Breweries has become a liability to the local authority as it is failing to generate revenue from properties that council could benefit from if privatised.
Pungwe currently owes Mutare council over US$400 000 in unpaid rentals for beer halls that it has been running.
The brewery had proposed to make periodic payments of US$8 000 per month to clear the debt but the offer was rejected.
Mutare mayor, Tatenda Nhamarare, said council resolved to get a full report of the unit’s financials before taking any action.
Nhamarare further indicated that three councillors have been seconded to sit on the Pungwe board.
“During the full council meeting some councillors raised that motion (to evict Pungwe Breweries) but we later resolved that we need to have a full report of the company’s financials from the board before taking any action. It is in this regard that three councillors have been sent to sit in the board to get an understanding of what is happening there,” he said.
In 2012, former town clerk Obert Muzawazi proposed to lease out all the bars that were being operated by Pungwe, citing excessive losses by the company that were draining council coffers.
Allegations of mismanagement and corruption have been cited as the major problems affecting attempts to revive the beer making firm.
At one point council secured a loan to bail out the entity but the funds were allegedly misused.
Pungwe also attempted to invite partners to revive its operations but the tenders received no takers.
Last year, the Ministry of Local Government directed council to shut down the loss-making venture on the basis that it was bleeding the local authority of millions of dollars in salaries.
Similar problems characterise other breweries such as Ingwebu and Go-Beer.
The Bulawayo council has proposed to privatise its brewery as the authority is incapacitated to revive the entity.
In a statement issued last month, town clerk, Christopher Dube, said they were seeking to privatise the brewery.
“In the past, Ingwebu has failed to access funding from financiers, who have questioned the legal status of the brewery. The major thrust of the privatisation of the brewery is to protect the Bulawayo City Council and stop the accumulation of further debts,” he Dube.
He indicated that Ingwebu required US$4 million to refurbish its plants.
Go-Beer was also shut down in 2014 owing to serious financial challenges after it accrued a debt of US$2,6 million.