Business affected by the government's price controls include Edcon and Shoprite
SA firms plan to stick it out in troubled Zimbabwe
July 11, 2007
By INGI SALGADO and MZWANDILE JACKS
Cape Town and Johannesburg - South African companies in Zimbabwe are attempting to outlast a hyperinflationary environment and government-imposed price controls to maintain a presence in expectation of eventual political and economic stability.
None of several large businesses canvassed by Business Report had intentions of divesting from Zimbabwe.
In fact, two mining firms, Impala Platinum (Implats) and Metallon, had plans for capital investment in a stable climate.
"There's a lot of money waiting to come into Zimbabwe, but it needs the right conditions for that to be unlocked," said Mark Wellesley-Wood, chief executive of Metallon, Zimbabwe's biggest gold mining company with 100 000 ounces of annual production.
Businesses affected by the regime's order to slash prices included retailers such as Edcon, which owned 42 percent of Edgars Zimbabwe, and Shoprite, which owned a store in Bulawayo.
"We have a strong belief that things will return to normal. We are not going to close shop," said Whitey Basson, chief executive of Shoprite.
But others have been hit by hyperinflation, estimated at about 9 000 percent.
Tongaat, which owned a majority stake in Zimbabwe's second biggest sugar business Hippo Valley Estates, said it had for some time been implementing its domestic market pricing strategies in consultation with appropriate government ministries.
Tommy Edmonds, chief executive of Tourvest, which owns the Wild Horizons activity business in Victoria Falls, is one of the few South African businesses whose income stream, paid exclusively in US dollars, has been unaffected.
Some other South African companies are reliably understood to be trucking in food parcels for their staff.
Metallon said it would consider doing so for its 5 000 employees, while Tongaat said that it from time to time engaged in "creative initiatives" to assist employees.
Implats chairman Fred Roux said the operating risk was negligible compared with the risk of operating at relatively deep levels in the Western Bushveld.
Implats spokesperson Bob Gilmour said Zimbabwe had the world's second-largest known deposit of platinum group metals, offering enormous upside potential for the company.
"Given a stable social and political environment, we have plans to expand production to an excess of 1 million ounces of platinum per annum."
Edcon head of investor relations Tessa Christelis said that the group had no intention of selling its shares in the Zimbabwe operation.
PPC, South Africa's biggest lime and cement producer - which also has a presence in Zimbabwe - acknowledged that operating in Zimbabwe was difficult, but had no intentions of disinvesting in the country.
Clive Tasker, the managing director of Standard Bank Africa, said it was a very difficult operating environment with increases in the amount of cash in circulation and the challenges that came with hyperinflation.
"But we have a competent local management team which is coping well under trying circumstances," Tasker said.
Standard Bank runs a retail and wholesale bank with 16 branches and about 600 staff members.
It had invested more than R170 million in the country and at its peak, the operation was the bank's most successful African business.
Pick 'n Pay, said that goods at its Zimbabwean operation, TM Supermarkets, were in "very short" supply.
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