Harare — Industrial giant, BICC- Cafca Ltd., says it is pulling out of a joint venture with Celmoque of Mozambique after making a loss of about $33 million due to a depressed market and lack of effective management, a company executive has said.
BICC-Cafca managing director Rob Galbraith told the Zimbabwe Independent this week that the investment in Mozambique was no longer viable and the company had decided to close down operations.
"It was no longer sustainable for us to remain operating in Mozambique due to the dwindling market and government bureaucracy," said Galb-raith.
He said his company commenced operations in Mozambique in 1999 but did not realise returns due to the depressed market.
"There is a lot of bureaucracy within government circles in passing legislation. The ability to make things done in Mozambique was very difficult as we encountered a lot of red tape," he said.
"After realising we were losing money, it was deemed necessary to close down in the short-term."
However, he said the company would continue supplying their locally- produced products to Mozambique.
On their type of business in Mozambique, he said they were also manufacturing and selling cables.
"We are managing the contract of the business as our technical staff will visit Mozambique while operations are done by our technical partner," he said.
BICC-Cafca, a listed industrial stock with interests in the manufacturing, marketing and distribution of copper electric cables and overhead conductors, operates in South Africa, Zambia, Botswana, Malawi and Zimbabwe.
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"We are looking for other markets because we want to become a major player in Africa," he said.
Galbraith said the economic hardships prevailing, particularly in Zimbabwe, and the company's expansion programme were faced with great challenges like foreign currency shortages, fuel and the general economic slowdown.
"Liquidity in the market place has been extremely tight during the year; due payments have been difficult to collect, a problem which has affected both the company and our customers," he said.
Galbraith said the response to these challenges had enabled the company to defend successfully its dominant position in the Zimbabwe cable industry.
According to the company's financial year-end results to December 31, 2000, the adverse trading environment had resulted in a loss after tax of $73 million in current cost terms.
"Low demand and economic negatives resulted in a 15% drop in volume sales while gross margins have fallen mainly on account of exports," said the company.
