Mugabe’s dairy struggles under a US$20m debt

PRESIDENT Robert Mugabe and his family’s multi-million-dollar Gushungo Holdings business, touted as a model of success of the controversial land reform programme, is reeling under an unsustainable US$20-million debt.

Herbert Moyo/Elias Mambo

The situation has been exacerbated by continuous loses incurred by its subsidiary Alpha Omega Dairy (Pvt) Ltd, forcing the First Family to seek emergency funding to rescue the company.

Information obtained this week from reliable sources at Gushungo shows the company is struggling due to a mounting debt, mismanagement and misappropriation of funds now under probe.

Alpha Omega general manager Stanley Nhari previously said local banks, in particular the Industrial Development Bank of Zimbabwe (IDBZ) and CBZ Bank, sustained operations at the company.

The Alpha Omega Dairy plant has a capacity to process 70 000 litres of raw milk per day. Its managers had said it was targeting to double raw milk output to 40 000 litres per day by year-end, from the current 23 000 litres per day. The company produces brands such as Mnandi sour milk and flavours of Appertina yoghurt.

Reliable sources at Gushungo told the Zimbabwe Independent that although the First Family has been thinking about disposing of the business, they have resolved to find a new investor who will inject fresh capital because the company is of “sentimental value” to them and they want to keep it.

As a result of the serious problems threatening the business with collapse, the Mugabe family has shaken up the company’s management, booting out Nhari and replacing him with one Zietsman.

First Lady Grace Mugabe is said to be fuming over the huge loses and has ordered an investigation into the operations of the company as she is convinced Nhari and other executives looted the business dry.
Although he has been kicked out, Nhari is said to be assisting an audit team from Ernst & Young which is combing through financial records as part of the investigation.

The sources said Grace has also approached her business networks and lawyers to look for potential investors to partner the family in the dairy project.

“The First Lady has instructed her business networks and lawyers to look for potential investors interested in buying shares in the business to ensure a joint venture,” a source said. “The idea is no longer to sell off or dispose of the business, but to look for new investors and managers to ensure recapitalisation and a turnaround.”

Last year Grace told wives of traditional chiefs that Alpha Omega owes banks over US$20 million they used to kick-start operations.

“Nhari was forced out due to allegations of mismanagement and misuse of funds,” another source said. “He may still be coming to the office, but he only sits at the reception area just to assist the auditors conducting a forensic audit. There are investigations also aimed at ascertaining how some employees were promoted to their current positions without the requisite qualifications, and the prejudice to the company through such unethical and unprofessional practices.”

Nhari this week refused to comment on the goings-on at the company.

“I’m not the company’s spokesperson,” he said. “You have to ask the company spokesperson.”

Asked who speaks on behalf of the company, Nhari said: “It is the principals; the owners of the company.”

Addressing guests at his niece Petronella Nhetekwa’s 80th birthday celebrations in Mhondoro last Saturday, Mugabe expressed his frustration over the looting at his company before suggesting corruption was rife because of society’s failure to mould upright citizens. “I decided to start a dairy business,” he said. “We hadn’t moved into cheese production, but we had started producing ice cream. See what was happening: nobody can tell us where the money is.”

He added: “Some (of the employees) did accounts, but prefer not to follow proper accounting procedures to hide their thievery. We have hired auditors from Ernst & Young and what they are unearthing is shocking.”

The company has always been brandished as a well-run and highly successful business, a model of success of government’s controversial land reform programme and indigenisation policy.


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