eBusiness Weekly
Martin Kadzere
The African Development Bank (AfDB) has expressed commitment to continue providing funding to Zimbabwe’s agro processing sector following the approval of $8,3 million loan to Olivine Industries.
Last week, the AfDB board approved a US$8,25 million loan to Olivine, a local unit of Wilmar International to build two plants in line with the company’s drive to expand its food portfolio with new products. The loan will see the company building a new margarine plant and a new tomato sauce line.
“The bank’s loan, approved on Wednesday (last week), will enable the company to construct new processing plants for margarine and tomato sauce and install upgraded machinery with advanced technologies. Olivine plans to increase its domestic and regional production capacity and food supply.”
“With this transaction, the bank will provide long term hard currency financing in the Zimbabwean market, and create a strong demonstration effect to both commercial and development finance institutions which will encourage investment in agribusiness in
Zimbabwe, AfDB director (agriculture finance and rural development) Atsuko Toda, said in a statement last week.
In approving the loans, the AfDB said the transaction provided a good opportunity for the bank to deepen effective private sector intervention while promoting the “Feed Africa’s agenda that forms the bank’s High 5 strategic priorities.
Olivine is one of Zimbabwe’s largest food processors, well known for producing products such as margarine, cooking oil and canned foods.
Wilmar, listed on the Singapore Stock Exchange owns a 65 percent controlling equity in Olivine through its local subsidiary Surface Wilmar Investments, which also owns 95 percent of cooking oil producer in Chitungwiza. Once the company’s production reaches an adequate level, the new project could potentially support 200 to 300 local farmers through Olivine’s corporate farming model to be developed in the near future.
In 2007, the Government took over H.J. Heinz Co’s 49 percent stake in Olivine through The Cotton Company of Zimbabwe in a US$6,8 million deal facilitated by the Industrial Development Corporation.
Then, relations between Olivine and Government had strained on allegations that the firm had stopped producing cooking oil after being barred by the US government from buying raw materials from black farmers who had taken over land previously owned by white farmers.
Prior to the deal, the Government owned 49 percent in Olivine Industries, in a partnership forged in 1982 and in terms of which, the US food company had a contract to manage the business.
In 2013, AICO Holdings, the parent company of Cottco, then listed on the Zimbabwe Stock Exchange embarked on an unbundling exercise, which involved the disposal of shares in Seed Co, another listed entity were it held 49 percent and Olivine, to raise money needed to pay off huge debts. Olivine Industries was a loss making enterprise at a time it was taken over by Wilmar International.
