The Eastern Cape government’s decision to offer up a controlling stake in the operations of the Magwa and Majola tea estates hopefully signals a light at the end of the tunnel for the embattled enterprise.
The taxpayer has, for years, pumped in tens of millions of rand into the Magwa farm, near Lusikisiki, and the Majola estate at Port St Johns.
This as serious mismanagement and continuous labour unrest hamstrung production.
In August, the bankrupt Majola tea estate was liquidated by the Grahamstown High Court, paving the way for the provincial government to buy it back at a nominal value with a view to consolidating it with Magwa.
A month later, rural development and agrarian reform MEC Mlibo Qoboshiyane told the Bhisho legislature that between May this year and January 2019, the provincial government would have invested more than R148-million in the two estates.
He tabled, as part of a business rescue plan, a proposal to offload some shares to private investors.
This week Qoboshiyane announced at least 51% of the shareholding would be given to a private investor.
“A shareholding of 26% would be given to the community, 13% to the employees of the tea estate, while government will hold 10%,” Qoboshiyane said.
The idea is to secure the much-needed capital investment to make the factory operational as well as to get the estates commercially viable.
Bidders must present a sustainability plan to reduce the cost of production and maximise market penetration.
It is therefore common cause that reviving this business will need significant investment and, crucially, a steady and visionary managing hand to turn its fortunes.
Only investors who demonstrate this capacity must be considered.
We cannot afford to see more public money poured into what has so far been a bottomless pit.