The African Development Bank (AfDB) has granted Olivine Industries, the maker of household brands such as Buttercup and Olivine oil, a US$8.25 million loan to build two new factories and replace aged equipment.
Olivine will construct two new processing plants for margarine and tomato sauce and install upgraded machinery with advanced technologies, AfDB said in a statement. Olivine plans to increase its domestic and regional production capacity and food supply, the bank said.
“With this transaction, the Bank will provide long-term hard currency financing in the Zimbabwean market, and create a strong demonstration effect to both commercial and development finance institutions, which will encourage investments in agribusinesses in Zimbabwe,” said Atsuko Toda, Director, Agriculture Finance and Rural Development at the African Development Bank.
Toda said Olivine presented a unique opportunity for AfDB to participate in rebuilding agricultural value chains in Zimbabwe, thereby creating jobs, improving food security and nutrition while reducing the country’s dependence on food imports.
The two new plants can support up to 300 local farmers through Olivine’s corporate farming model to be developed in the near future.
Olivine had shuttered its old Harare plants in Birmingham and Willowvale, where some equipment was installed back in the 1960s.
Olivine is 65% owned by Surface Wilmar, and 35% by Government. In November 2018, on a tour of Surface Wilmar’s Chitungwiza oil factory, Finance Minister Mthuli Ncube said he planned to sell-off part of Government’s stake in Olivine to a private investor to allow the company to raise fresh capital.
In January last year, Surface Wilmar was forced to halt production after foreign creditors cut off raw material supplies over a US$11 million debt. Production resumed last May.
Surface Wilmar, a joint venture between Singapore agribusiness giant Wilmar and Midex Global of India, bought into Olivine Industries in 2015.
The investment revived the company, which had virtually collapsed, bringing back famous brands that had disappeared from store shelves; Jade, Perfection soap and Olivine baked beans, among others.
However, in September 2018, the company warned that foreign currency shortages had become a serious threat to operations. Surface Wilmar also criticised the Command Agriculture subsidy programme, saying it was unsustainable for the long term, offering an alternative model “that will seek to empower the farmer as well as reduce the costs of doing so”.
Surface Wilmar invested US$15 million when it entered the market in 2015, and had plans to invest a further US$73 million into the country. But its shareholders have had to push back on those plans due to deepening forex shortages, Surface Wilmar said in 2018.
The company employs 450 workers at its 90%-owned Chitungwiza Pure Drop oil factory.