HomeNewsJaggers: A case of failed indigenisation

Jaggers: A case of failed indigenisation

-

Jaggers Wholesalers has in the recent past hit the headlines for all the wrong reasons.

What makes it sad is that it comes at a time when the country is gripped with the implementation of the controversial Indigenisation and Empowerment Act.

The Indigenisation and Economic Empowerment Act was passed by a then-Zanu PF dominated Parliament in 2007 but only came into force in January 2010 with the gazetting of regulations by Indigenisation minister Saviour Kasukuwere.

The regulations apply to all businesses in Zimbabwe with an asset value of or above $500 000, although it does not specify whether this refers to net assets or share capital, issued or nominal.

The regulations empower the minister to establish a database of people who want indigenous Zimbabweans to acquire an interest in their businesses, and of indigenous Zimbabweans who wish to “partner” those people.

Jaggers was once one of the leading distributors of fast-moving consumer goods before it was acquired by businessman and farmer Cecil Muderede in April last year.

Muderede gained a controlling equity of the wholesale giant after buying out the previous major shareholder, Metcash Africa, a South African company, through his investment vehicle Borlscade Investment (Pvt) Ltd.

Last year, a host of other indigenous firms and people had their properties attached including those of TeleAccess boss Daniel Shumba, David Govere’s Harambe Holdings and Lobels (Pvt) Limited, owned by a consortium of local businesspeople.

The wholesaler’s furniture and other accessories are set to go under the hammer on Thursday and Friday this week after Delta Beverages successfully sued the two companies in a bid to recover a $443 795 debt.

This is not the first time that goods belonging to the wholesaler will be sold as an assortment of groceries and electrical goods belonging to Jaggers Wholesalers was auctioned recently at Ruby Auctions in a case involving Charter Properties.

Add to that a recent High Court ordering Jaggers Wholesaler to pay a $1,4 million debt it owes CBZ Bank Limited plus interest arising from a $3 million overdraft facility the company received from the bank two years ago.

The bank’s lawyers, Kantor and Immerman, said they had facilitated an overdraft facility for Jaggers Wholesalers. But the firm failed to settle the debt, which prompted the bank to file papers in the High Court.

Last week the deputy sheriff ran adverts of an auction regarding the sale of Jaggers Wholesalers.

“Duly instructed by the deputy sheriff of Harare, we shall sell by public auction the following (see list below) to the highest bidder at Jaggers Msasa on January 21 and 22,” reads part of the advert flighted during the course of last week.

Some of the items to be sold include fridges, freezers, ironing boards, television stands, rocking chairs, computer stands, beds, mattresses, coffee table sets, forklifts and trolleys among other goods.

In April last year central bank governor Gideon Gono attacked the indigenisation programme, calling it a “reckless” initiative championed by “vultures”.

Gono said the “indigenisation crusade is being championed by a number of senior and well-connected personalities who are already positioning themselves to muscle into certain mining, manufacturing, banking and other entities that are currently performing well.”

Gono first made his intervention on the indigenisation policy through a mid-term monetary statement in October 2007.

He called on the government to ensure that the empowerment drive does not end up as an orgy of self-enrichment by a well-connected elite as had happened with land reform and other earlier empowerment programmes.

The central bank suggested a gradual indigenisation structure that envisages foreign companies worth in excess of $500 million to achieve 20% local ownership in five years, moving to majority local ownership by the fifteenth year.

Soon after its takeover Jaggers has experienced viability problems leading to the scaling down of its operations.

Last year in April the wholesale closed down 11 branches out of the 52 branches it had in the country as a cost-cutting measure.

The continued decline in the performance of company has also raised fears of future takeovers of once-vibrant companies by indigenous businesspeople.

A fortnight ago the Affirmative Action Group (AAG) raised concern over a pending deal involving Makro South Africa and OK Zimbabwe over the latter’s acquisition of Makro’s local subsidiary.

The indigenous empowerment body has already taken the matter up with the Competition and Tariffs Commission arguing it is against the spirit of the indigenisation and empowerment drive.

AAG secretary-general Tafadzwa Musarara said the acquisition of Makro by OK was crowding out smaller indigenous players.

“What OK is doing is stampeding out upcoming indigenous people. We are of the view that the deal is against the advancement of the indigenisation and empowerment drive,” he said.

“Indigenisation should be adding numbers of businesspeople not to continue benefiting the few individuals who are already shareholders,” he said.

As the saga unfolds, we wait and see what will become of it.

Recent Posts

Stories you will enjoy

Recommended reading