THE government owes Seed Co Limited a staggering US$40 million for seed purchases and deliveries made during the past 18 months, plunging the company into a severe liquidity crisis.
Speaking to media on the sidelines of Seed Co analysts briefing, chief executive officer Morgan Nzwere said the government, as the biggest shareholder, owes them a staggering US$40 million from the past 18 months which has affected their operations.
“We have declared a dividend in Zimbabwe for the first time in five years and we doubled the dividend that we declared in Zimbabwe compared to prior year and we hope this trend will continue,” he said.
“We are a bit careful when it comes to the dividend that we declared in Seed Co Limited because we are still owed quite a bit of money by our debtors, including the government, so we have to watch the cashflow, otherwise you end up declaring a big dividend and then you don’t have money to run operations.
“This is the reason we are being conservative in terms of our dividend declaration. We are owed about US$40 million when you add up all the government debt and its housed in different categories like there is direct government, ARDA, and through other programmes like winter wheat programme, Ministry of Agriculture and so on, over a period of 18 months.”
Seed Co Limited declared a dividend of US$2,3 million for the first time in five years despite a prevailing liquidity crunch.
The government, the biggest shareholder in the company, has the biggest debt on its shoulders through its different departments and Nzwere said this debt was choking the seed company’s daily business operations.
Nzwere said they had engaged the government over a payment plan, but that the system was very unpredictable.
- Seed Co muscled out of Pfumvudza
- Cricket reaps benefits of fan engagement initiatives
- SeedCo records 14% growth in volumes
- Seed Co eyes DRC market
Keep Reading
“So it’s not very predictable. We have been engaging them, but it’s difficult to predict when we are receiving money,” he said.
“I think what normally tends to happen is just before they apply for orders for this year, that is when they make a weekend payment. So we do hope that they will make a weekend payment.”
Meanwhile, the company’s revenue grew to over 90%, while sales volume grew to over 50% amid increased demand on both local and export markets and tender business on the local market.
“Our volumes have grown in Zimbabwe. The volumes grew by almost 92%, of which 33% were exports. We saw profit in Zimbabwe growing significantly and we were happy to be selling in US dollars this year and the payments that we are receiving are very much US dollar-based,” Nzwere said.
“We are happy with the stability of the currency, which means even if you get paid in ZiG, you are still getting the same value that you would have gotten in US dollars.
“We are happy with our production this year and we are also happy to be exporting to business units that didn’t have adequate stocks in the region because that did help our exports quite a bit.”
In terms of research, Nzwere said the group was expanding its research programme given that it was trying to come up with unique products for some of its regional markets.
He said Seed Co’s success this year was also linked to its expansion into regional markets, where demand for seeds is high.
The company is broadening its research programmes to develop tailored products for diverse environments.
“The business recorded 52% in sales volume growth amid increased demand on both local and export markets,” Nzwere said.
“Maize seed sales outstripped the budget benefitting from regional demand in response to the El Niño impact in the previous year.
“Volume growths were recorded in wheat and small grains seeds as farmers responded to effects of climate change.
“The business continues to face pricing pressure on the market due to exchange rate disparities and undercutting by competitors.”
