According to commentators, indigenisation would disrupt operations at the company.
IH Securities said Tongaat Hulett, the operator of Triangle and Hippo Valley sugar milling concerns, will have to compromise with the government because of the strategic importance of the company. “It is likely that Tongaat Hulett will try to negotiate an amicable solution as its Zimbabwean operations provide the largest contribution to the group’s profit from operations in 2012, generating R621million (32 percent) of the consolidated total of R1.921bn, and remained the most significant contributor to profit from operations,” IH said.
Economic analyst, Takunda Mugaga, warned of severe socio-economic repercussions for Chiredzi if the government proceeds with its plans to force the company to yield a stake to locals.
“What the government needs to realise is that they are tampering with the lives of Chiredzi residents and the social cost will be greater than the cost to the company. This move could literally shut down Chiredzi and thus increase pressure on Harare from the resultant migration,” Mugaga said.
Mugaga said that government should not take investors for granted and lambasted the government’s attitude as detrimental to the country’s economic future. “Markets exist by the grace of investors and the ministers pushing this programme should not think that finance will come looking for them,” Mugaga said. He called on the government to desist from the current equity model being championed by Youth Development, Indigenisation and Empowerment Saviour
Kasukuwere saying the supply side economic empowerment model would instead revitalise a town like Chiredzi.
Kasukuwere has already said that TongaatHulett has failed to comply with the indigenisation laws of the country and the government will take stern measures against it.
Tongaat Hulett has, according to some press reports, submitted an indigenisation plan but it is yet to be approved.
Post published in: Business