At Lobels, the ovens that made its biscuits were installed in 1957, six years before ZANU was formed. Packing at Lobels was done by hand, and not automated. Costs would have cut by half if the company had secured new equipment, its MD Clinton Lecluse was quoted as saying late last year. Weeks ago, Lobels had to shut down the confectionary unit.
The resurgence of the cooking oil industry shows what can happen if protectionist policies come with increased investment in capacity. The government increased duty on cooking oil imports, while investors put in new money.
Willowton, the makers of the Sunfoil and D’lite brands of cooking oil, are building a new $40 million plant in Mutare. India’s ETG Parrogate, which trades as Pure Oil, the producer of Zimgold cooking oil, plans to double its cooking oil output to seven million litres per month after buying new machinery.
Surface Wilmar, a joint venture between India’s Somani Family and Asian agribusiness group Wilmar International, has emerged as Zimbabwe’s biggest edible oils manufacturer, after adding a 49 percent stake in Olivine to its Chitungwiza plant which produces Pure Drop.
Industry Minister Mike Bimha says due to steps taken to bar foreign oils, Zimbabwe was now producing 12,1 million litres per month, which is above the national monthly consumption of 10 million litres.
However, cooking oil producers still have to import raw oil to process, and are only now starting to fund local farmers to produce the amount of soya bean required to feed the factories. It remains unclear whether the contract farming solution will be able to keep prices low.
The 2014 import duty hike may have helped the cooking oil business, but an outright ban on its own will not be enough to help the rest of Zimbabwe’s aged industries.
Fertiliser is one of the goods banned last week, but the ban is unlikely to save Sable, the country’s sole producer of ammonium nitrate. The company uses old, expensive electrolysis technology for production of hydrogen, technology it first used in 1972.
Sable needs $700 million to move to new technology. The electrolysis plant consumes 80MW of power, which is the amount of power once produced by the Harare Thermal Power station. Sable still owes $150 million in unpaid power bills.
The government has tried to push industries to modernise by granting cheap loans. Between 2011 and 2014, government doled out $28 million in concessionary credit to 48 companies. But the loans were so short term that many of the distressed companies could not pay back.
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