#mugabe estate in sorry state

via Mugabe estate in sorry state March 7, 2014  By Chris Muronzi

On arrival at what was once a part of Interfresh’s Mazoe Citrus Estate in the Mazoe farming area, maize seed greets the eye and fools the unsuspecting traveller of the actual situation on the ground.

The maize seed acts as some kind of security barrier blocking the prying eye of the passing travellers along the busy highway from seeing behind the scenes.

A quick drive around the farm paints a gloomy picture of the situation at the farm. Although part of the farm is utilised with a porton of it under maize and potatoes for the current season, the estate is now a pale shadow of its former self.

What was once a vibrant lemon orchard on the same farm is now a wretched waste land with either lifeless and dry fruit trees or severely wilted lemon trees. Conveniently, and as if for the avoidance of doubt, on one of the trees is evidence that these were once lemon trees. In the absence of these very small marble-sized lemons, one would be forgiven for thinking the trees are only good for firewood.

In its better days, the orchard fed lemon juice into the Mazoe juicing plant, once a supplier of a citrus juice for the famous Mazoe orange crush manufactured by Schweppes Zimbabwe.

At this rate, the 1000 plus workers of Mazoe Citrus fear finding themselves unemployed.

The new owner of the land, Grace Mugabe, President Robert Mugabe’s wife, seems more interested in charity work, judging by the hectarage planted.

Just this week, pictures in a state-owned daily, depicted Grace in the company of a former Ghanaian leader’s wife, showing off her charity work.

But a few kilometers from where she built a school and an orphanage is what is left of Interfresh’s Mazoe citrus estate, a former source of livelihoods for the community.

Now, Mugabe has been allocated more land of the estate. Adjacent to the farm is vast land, about 870 hectares under various crops and citrus orchards.

Unfortunately, Interfresh, the owners of the land will not be able to reap the crops this season as the powers-that-be are in the habit of literally reaping where they did not sow.

In the first land seizure, they took all the crops from the 1 600 hectares, which were ready for harvest leaving Interfresh on the precipice.

Curiously, the latest occupation of the estate will be the death knell on an otherwise viable business enterprise. It doesn’t end with viability problems at the estate.

Already, the move has blocked external lines of credit to the firm and the troubled Southern African country after some of its traditional financiers, including Industrial Development Corporation South Africa (IDCSA), raised concerns over rising risk as the company struggles for survival.

The land grabs have left Interfresh tottering on the brink of collapse, while investors are scurrying for cover fearing their money will sink in an increasingly unviable enterprise being destroyed by the unceasing land confiscations.

Mugabe, on the other hand, stands accused of presiding over the economic decline that has ravaged the economy since independence from Britain in 1980 throwing more than 80% out of employment.

Documents show Interfresh has total land holdings of 3 800 hectares. Grace has taken 870 hectares (23%), leaving Interfresh with 2 930 hectares (77%).

Of the 3 800 hectares, only 1 067 hectares is arable. Grace grabbed 414 hectares (39%) of arable land, leaving Interfresh with 653 hectares (61%).

This latest land acquisition by the First Family effectively renders Interfesh unviable, compromising its ability to pay back IDCSA its loan administered by the state-owned Agribank.

Interfresh’s total budgeted revenues plunged to US$8,7 million from US$10,4 in December 2012 after the first seizure in 2012. The actual turnover dropped to US$3,1 million compared to the budgeted turnover of US$10,4 million.

The developments have unnerved IDCSA, who advanced a US$30 million line of credit to Agribank, which on-lent US$5 million to Interfresh.

IDCSA in March last year sent a delegation to Zimbabwe to protest against escalating political or country risk hitting Interfresh.

Financiers such as PTA Bank, Development Bank of Southern Africa (DBSA), Afrexim Bank, African Development bank (AfDB) and IDCSA are unnerved by the land seizures. Analysts say the Mugabe land occupation does not help portray the country as a safe investment destination.

Unfortunately, these same financial institutions are the ones currently oiling the economy through lines of credit to banks and institutions of national interests. If anything it shows blatant disregard for property rights, analysts say.

For instance, IDCSA was on the verge of finalising a line of credit to a local institution, but has now frozen the facility as sovereign risk rose in light of the Interfresh problems amid concern it could throw in good money after bad.

Zimbabwe continues to experience a liquidity crunch that has hampered government’s efforts to resuscitate the ailing economy.

DBSA and IDCSA share the same shareholder — the South African government — and this is causing grave concern in Pretoria.

To make matters worse, the seized land housed 52% of the assets, both biological and immovable, leaving the total assets of US$11,7 million, suffering a US$5,7 million impairment on the balance sheet.

So concerned is IDCSA with the US$5 million loan that they sent a delegation to Harare and indicated to Agribank and Reserve Bank of Zimbabwe that the institution wanted to reconsider its local investments.

African Agriculture Fund (AAF), an equity partner in Interfresh, is a US$243 million fund focused on SMEs, was on the verge of investing more into the company and has frozen these funds.

All this comes at a time Zimbabwe is battling to attract foreign direct investment and portraying itself as an investment destination where property rights are respected and protected.

As part of the AAF deal, the local community would have benefitted after the fund set aside €500 000 in technical assistance to small scale farmers.

Owing to the incessant land seizures Interfresh’s remaining assets are only US$4,6 million against US$11,7 million liabilities.

“In its current form the business of Interfresh is therefore not viable. The remaining business operations which are Mazoe Citrus juicing factory and the citrus plantations, though viable as stand-alone business units, cannot carry the total liabilities of the entire business pre-December 2012 period,” the document reads.

The land-grabs have also ruined the group’s planned capital raise as it emerged that an additional US$2,5 million in working capital from AAF that was due by January 31 2014 has now been frozen.

According to documents, AAF is under pressure from some of its shareholders who are now mulling possible legal action in terms of Bippa to protect the investment.

 

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