Investors interested in battling tea estate

Eastern Cape Rural Development Agency chief executive Thozamile Gwanya, Ingcuza Hill mayor Pat Mdinge and Rural Development and Agrarian Reform MEC Mlibo Qoboshiyane help with the harvest at the Magwa tea estate

Treasury commits millions to find funders

Four investors have indicated interest in bringing much-needed funds to the embattled Magwa tea estate. Now the Department of Rural Development and Agrarian Reform, which owns shares in the massive estate near Lusikisiki, is hoping to bring even more investors on board.

Rural Development and Agrarian Reform MEC Mlibo Qoboshiyane said the Treasury had committed to providing R116-million to help attract these investors, with R85-million of this amount already given to the department in this financial year.

“We decided to partner with the private sector, with an equity share of 51% for investors,” Qoboshiyane said.

“Now that the shares have been transferred to the department, we will advertise for more [investors].

“We want to see change next year.”

The investors cannot be named as they have yet to go through the official process.

The estate of 1 803 hectares – the largest of its kind in the southern hemisphere – was placed under business rescue early last year.

Qoboshiyane visited the estate yesterday as it was the first harvest since it entered business rescue.

This follows years of problems such as mismanagement and labour unrest.

“The business rescue practitioner, [who was engaged with the intent] to make an analysis of the business’s feasibility, said without funding there can be no production,” he said.

The department had poured R20-million into the estate for interim operational requirements while under business rescue, he said.

The decision was also made to merge Magwa with the 400ha Majola tea estate in Port St Johns, which is run by a workers’ trust.

This process was still under way, but the plan was approved by the provincial government’s executive council.

“We couldn’t have two estates below standard.”

Qoboshiyane was, however, confident that the business could thrive.

“It is showing signs of success and I am quite happy. We have good rains and soil and less frost, which is good for the harvest, and we produce tea for Pakistan, China, India and local markets.”

The estate had produced about 140 000kg of tea per season prior to being closed for business rescue, but had the potential to produce 3.5 million kilograms.

“If we have more than 2 000ha, we can once again be one of the biggest producers,” Qoboshiyane said.

Edson Mtshixa, who has been working as a manager at the estate since 1984, was equally positive about the future.

“We had our ups and downs, but you can smell in the air that change is coming.

“Interested investors are expected to submit a detailed plan for turning the tea estate into a profitable business venture, including ways to reduce production costs and increase competitiveness and capacity,” Mtshixa said.

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