Council owned traditional beer brewing company Kwekwe Brewery is reportedly making huge loses forcing, the local authority to use ratepayers’ money to fund the beverage concern.
BY BLESSED MHLANGA
City treasurer, Rejoice Maweni told a finance committee meeting that the company had become a huge risk to council finances, because it was operating at a huge loss and was now failing to settle its loan with FBC Bank, following a garnishee order issued by Zimbabwe Revenue Authority (Zimra).
According to committee minutes, Maweni said loan arrears of up to $20 000 had accumulated because Zimra was now taking all the deposits made into Kwekwe Brewery, after the company failed to remit taxes and the loan threatened ratepayers money as it was guaranteed by council.
“Kwekwe Brewery has since tried to use their other bank account with ZB Bank with a view to avert the garnishee, but Zimra has followed up that account, making it hard for the entity to repay their loan to FBC, as every dollar that comes into the account is garnished such that loan arrears of over $20 000 have accumulated,” read the council minutes.
Maweni told the finance committee that the losses were being caused by poor road networks in most rural areas, where the concern enjoyed a great market share.
She said it was worse during the rainy season, as hired trucks would get stuck for weeks while transporting the beer until it went bad.
“She added that such losses were rife during the rainy season due to the condition of the roads, such that the hired trucks will be stuck for days on end until the beer goes bad,” read the committee minutes.
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Kwekwe City Council, in trying to turn the company into a going concern, entered into a management agreement with Limsol Trading, which expires at the end of this year. Maweni said she was waiting for a report from external auditors before council can make a decision to either renew the agreement or not.
Audit chairperson, Weston Masiya said the beer company was becoming an unnecessary burden to Kwekwe City Council and tasked audit manager, Morris Mutema to look into its financials and report to him.
“If I am not mistaken, we once bailed them out after firstly paying them $45 000 then $65 000. We need to look into the finances and establish how deep we are exposed so that we can make recommendations to council,” he said.
