Top cooking oil, soap and margarine manufacturer, Olivine Industries, has shut down operations in Zimbabwe, citing a crippling $11 million debt.
A large number of workers are expected to lose their jobs as the unemployment rate has reached record levels.
In a statement, the company indicated that it has been struggling of late due to the biting cash crunch in the southern African nation, which is experiencing serious foreign currency shortages, skyrocketing prices of basic commodities and the devaluation of the local quasi-currency, the bond note.
“The Board of Directors and Management of Olivine Industries (Pvt) Ltd regrets to advise its customers that all manufacturing operations have stopped. The company has struggled to restart its manufacturing operations in January 2019 for lack of imported raw materials. As such it remains closed after the shutdown in December 2018 and employees have been sent on indefinite leave.”
“… Production during the remainder of 2018 struggled at low capacity due to shortages of raw materials procured through letters of credit established before 30 September 2018 and on foreign supplier credit which were last serviced in 2018. The company currently owes US$11 million to its foreign suppliers who have since cut off suppliers until the arrears are paid.”
The company said it awaits foreign currency allocations “and is sitting with sufficient RTGS (Real Time Gross Settlement) account bank balances to pay off foreign creditors in full and procure further raw materials.”
It further noted that its efforts to engage government, especially the Ministry of Finance, have failed “and we regret closing our operations till further notice.”
Finance Minister Mthuli Ncube was quoted last November as saying that government was planning to sell part of it stake in Olivine Industries (Pvt) Ltd to an external investor to raise foreign currency towards recapitalizing operations.
Olivine Industries manufactures Buttercup margarine, Olivine cooking oil, Olivine and Green Valley beans, Jade toilet soap and Perfection, Dolphin and Big Ben laundry soap.
Company management and state officials were not available for comment.
According to S&P Global Markets Intelligence, Olivine Industries (Pvt) Ltd was incorporated in 1950.