Magwa Tea Estate: Like SAA, just another government failed ‘bottomless pit’ project

FF Plus

Magwa Tea Estate: Like SAA, just another government failed 'bottomless pit' project
Magwa Tea Estate: Like SAA, just another government failed 'bottomless pit' project

In the FF Plus’s view, the Magwa Tea Estate in Lusikisiki is the SAA of the Eastern Cape provincial government because the project is mismanaged, still financially dependent on tax money and has made no profit thus far. The project recorded 2 591 job losses even though it is a labour-intensive industry.

In February 2016, the High Court in Grahamstown ruled that the Estate, which at that time still fell under the Eastern Cape Development Corporation, must be placed under business rescue. The High Court later extended the business rescue process to November 2017, subject to the condition that the provincial treasury must make funds available for it. An amount of R116 million was earmarked, but only R20 million was paid to the business rescue organisation.

During an oversight visit by the Provincial Legislature’s Portfolio Committee on Rural and Agricultural Development, it became evident that the management of the Estate, which is the responsibility of the Eastern Cape Rural Development Agency (ECRDA), had stabilised, but that it was still not making any profit despite the fact that the Department of Rural and Agricultural Development had invested large sums of money in it.

Tea production is apparently hampered by a lack of machinery and the diversification of crops has still not been fully implemented. There are no investors who want to invest in the Estate either.

The FF Plus proposed that the Department must submit to the Committee a fully updated financial report indicating the funds that have thus far been allocated to the project so that it can be compared to the total nett income that the Estate has generated since its establishment.

Grandiose plans to turn the Estate into the biggest tea plantation in the Southern Hemisphere as well as a key role player in eco-tourism and the tea industry on the whole are doomed to fail if a way to attract private investors and wean the Estate from the Eastern Cape government cannot be found.

The FF Plus is of the opinion that the funds thrown into the bottomless pit of the Magwa Tea Estate could be put to better use, like drought relief in the province and the upliftment of emerging farmers.

Read the original article in Afrikaans by Theo Coetzee on FF Plus

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