The Sunday Mail
Africa Moyo recently in BULAWAYO
MR Bharat Chohan aimlessly paces up and down his milling plant. He occasionally gazes at his hands as if he is has lost something and does not know how to get it back. Once in a while he scrolls through messages on his smartphone. He is clearly a man in distress. The Tanzanian-born entrepreneur, who migrated to Zimbabwe in 1982 and is married to a Zimbabwean, is worried about the performance of his business.
Mr Chohan’s Pista Enterprises, which trades as Gold Products, was established in 2010 and has two divisions – a maize meal plant and a repackaging business for rice, flour, soya chunks, sugar beans and kapenta, among other goods.
But the milling business – which anyone would think to be lucrative given that the country’s staple food is prepared using mealie-meal – is on the brink due to a biting shortage of maize.
Last year’s El Nino-induced drought affected grain output for the 2015/2016 summer cropping season to below 350 000 tonnes from 1,4 million tonnes produced a year earlier.
The unfavourable weather conditions also affected swathes of South Africa, Zambia, Mozambique and Malawi. Until recently, Zambia, a net exporter, has been supplying needy regional peers. Lusaka’s decision to stop exports has hit medium-sized milling companies like Gold Products hard.
About 80 percent of the company’s 300-strong workforce is under the milling division. Gold Products mainly supplies Midlands, Matabeleland South and North province.
Scrounging for maize
As the situation becomes increasingly desperate, Gold Products has had to deploy teams to farming communities to scour for maize. It takes almost three weeks to secure nine tonnes of maize and for the company’s gluttonous state-of-the-art plant, milling through that tonnage take less than two hours.
“We have a maize meal plant that we are managing here in Bulawayo but activity is currently low because we don’t have maize and it is difficult to get it.
“You see, we are sending employees to go and look for maize in the rural areas and other parts of the country but more often they bring anything between eight tonnes and nine tonnes after spending more than two weeks,” said Mr Chohan.
The team is currently in Chinhoyi, Mashonaland West province. The businessman reckons the milling business is “always uncertain” because of the low harvests that have been plaguing the country over the past few years.
Milling companies have had to rely on imports from countries such as Brazil, Zambia and South Africa. Mr Chohan, however, notes that Government has always supported them in a big way. “We have been given import permits by Government on time each time we wanted to bring in maize,” he said.
Besides the impact that maize shortages have on the prices of mealie meal, cash shortages are also affecting the ability of the company to easily buy grain from farmers.
Banks are not paying suppliers timely and this is breeding mistrust between farmers and millers. Explained Mr Chohan: “The farmers who sell maize to us don’t understand any other form of payment apart from hard cash but we can’t get the cash from the bank. The situation is really bad.”
SMEs, which conveniently have small overheads compared to big businesses, have become central to Zimbabwe’s economic growth. They have become the frontiers of a new economy.
SMEs are now dominant in almost all sectors of the economy such as gold mining, milling, agriculture, fishing, food provision, beverages, carpentry and shoe-making.
But the greatest undoing for Gold Products has been its inability to retain clients and attract new ones. Efforts have, however, been made to buy quality milling and packaging equipment.
Currently, Gold Products’ milling plant can produce more than 90 tonnes of maize meal per day and there are plans to buy another one next year. Usually the milling equipment is sourced from South Africa.
The lull in activity over the past three months has paved the way for refurbishments that are meant to spruce up the place and enhance efficiencies. Mr Chohan said, “We thought it was prudent to do the renovations now when business is low than in the last quarter of the year when we will be gearing for Christmas.
“However, the cost is getting higher every time because we are not doing any production at the moment and the cost of raw materials we are using is going up since they are in short supply. We hope to reopen in two to three weeks from now.”
High operating costs
The cost of doing business is still very high for local businesses, especially SMEs. But some businesses have learnt to adapt through improving production efficiencies.
“I think Zimbabwe is the most expensive investment destination in the region; for instance, the operating costs in South Africa are not even 60 percent of what obtains here.
“However, since all millers are operating in the same environment, we can’t complain much because we are in the same boat. What is required to stay afloat is to have quality products, good customer care, competitive prices and delivering products on time,” explained Mr Chohan.
Realising how the business environment is for entrepreneurs, Gold Products has since partnered the Bulawayo City Council to provide stalls for 250 vendors.
News that the country is aggressively targeting grain output for the 2016/2017 summer cropping season could be sweet news for millers. It will immensely influence pricing and efficiencies. So, it will not only be farmers who will be expectantly looking forward to the rains, but an equally anxious group of millers.
