Leading cooking oil manufacturers, Olivine Industries and Surface Wilmar have closed shop. The issue is lack of foreign currency to procure essential raw materials especially crude oil. Olivine Industries manufactures Olivine cooking oil, Buttercup Margarine, Jade and Dolphin Soaps among other products. Surface Wilmar produce Pure Drop cooking oil and Excella rice. In terms of ownership, Olivine Industries is jointly owned by the Ministry of Finance and Economic Development and the Wilmar Group, which also owns Surface Wilmar.
US $11 million debt
Olivine Industries says, “The Board of Directors and Management of Olivine Industries (Pvt) Ltd regrets to advise customers that all manufacturing operations has 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.” It is frightening to note that a company owned by the Ministry of Finance and Economic Development can get to the extent of shutting down when government insists that the economy is growing. It is even more frightening that the company owes US $11 million to suppliers despite having enough money in their accounts to pay off the debt. This is another of the problems of maintaining that the bond note is at par with the US dollar. “Unfortunately, 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 lines which were last serviced in July 2018. The company currently owes US $11 million to its foreign suppliers who have since cut off supplies until the arrears are paid. The company awaits foreign currency allocations, and is sitting with sufficient RTGS Account balances to pay off the foreign creditors in full and procure further raw materials,” says Olivine Industries. The company also goes further to state that their engagements with government and shareholders have not yielded any results yet. Surprising?
Surface Wilmar Chief Executive Officer Sylvester Mangani has also confirmed the developments. Mr Mangani said, “Foreign currency has been a challenge hence our position to stop operations until further notice.” It is ironic that just a few weeks ago, Surface Wilmar issued a statement in the press assuring the public that their cooking oil price would remain at $3.70 in local bond note currency and that they had capacity to meet national demand. However, to their credit, Surface Wilmar did say that they were engaging the Reserve Bank of Zimbabwe (RBZ) for foreign currency allocation. As we now know, those engagements have yielded nothing as yet.
This and other similar stories have attracted mixed responses from the public, especially on social media. Some have attacked journalists and all those spreading such news as being keen on peddling anything negative and hence destroying the country’s image. Others have called current shortages of cooking oil and fuel artificial. However, the situation we are faced with remains glaring. No amount of sugar-coating will change the status quo. Call it what you like, the reality that faces us needs full attention so that those reporting will find something positive to write about. So, whether the glass is half full or half empty is not the issue. The glass is clearly not full, neither is it empty. Given the market share that Olivine Industries and Surface Wilmar jointly command, we may be in for another Delta like government bail out.
Government’s response is likely to come at lightning speed given the gravity of this matter, and such a response is key. It looks like government is firefighting again. Thousands of employees are already anxiously sitting at home pondering where their next meal will come from, literally.