Southern Africa’s teetering sugar industry, reeling from cheap imports and climate disasters such as flooding, faces collapse if Tongaat Hulett Limited (THL) — the region’s biggest employer in the agricultural sector — is liquidated.
Last week the company’s business rescue practitioners approached the high court seeking provisional liquidation.
They argued that the business rescue plan by the Vision Group Consortium, headed by businessmen Robert Gumede and Rute Moyo, had become “unimplementable”, dashing hopes of Tongaat Hulett’s rescue. The consortium is challenging the move, arguing that its plan remains the best to save the ailing sugar behemoth.
The beleaguered sugar giant, with operations in South Africa, Zimbabwe, Mozambique and Botswana, has been under business rescue since October 2022 after previous management ran it to the ground in what has become one of the biggest corporate scandals of the post-apartheid era.
About R12 billion of shareholder value was wiped off the company when the Johannesburg Stock Exchange, Africa’s biggest bourse, fined THL for submitting “false and misleading” financial statements.
KwaZulu-Natal, where the sub-Saharan agribusiness has operated since 1892, will be the hardest hit. About 2 500 direct jobs are on the line, while at least 25 000 indirect jobs are at risk. Further, about 27 000 small-scale sugar cane growers and the entire value chain face the most severe shocks in the province’s economy in decades.
At a time when rampant unemployment — one of the country’s biggest crises and a national emergency — takes root, the looming jobs bloodbath will decimate not only the sugar industry but also blight efforts to reduce jobless numbers and wreak havoc on the region’s food security.
The human cost of THL’s collapse is unimaginable. Communities will be wiped out overnight, turning parts of KZN into ghost towns.
The sugar sector, the backbone of the KZN economy, contributes about R19bn of the R24bn to the national fiscus.
The demise of THL will leave a hole in the country’s balance sheet at a time when the economy has begun to turn the corner.
Labour federation Cosatu, the Durban Chamber of Commerce and Industry, the South African Farmers Development Association and the SA Canegrowers Association have reason to be concerned by the turn of events in THL’s failed business rescue.
We all should be worried.
One company closing down in this economic climate is one company too many. For THL, an iconic South African company that employs thousands, its end is bitter and must be averted.
At a time when rampant unemployment — one of the country’s biggest crises and a national emergency — takes root, the looming jobs bloodbath will decimate not only the sugar industry but also blight efforts to reduce jobless numbers and wreak havoc on the region’s food security