Finance minister Patrick Chinamasa says government has assumed pharmaceutical manufacturer, CAPS Holdings (CAPS)’s, legacy debt.
Despite growing calls for government to stop warehousing State enterprises’ debt, Chinamasa said Treasury was moving to honour the ailing firm’s debts through Treasury Bills (TBs), in a move aimed at making the company attractive to investors.
“Government has also made a conscious decision to resuscitate CAPS Holdings and Cottco through warehousing their (these companies’) legacy debt under the Zimbabwe Asset Management Company (Zamco) before government fully takes up its equity,” Chinamasa said in a ministerial statement on TB issuance.
This comes as Industry minister Mike Bimha recently announced that government had completed the CAPS acquisition, which collapsed five years ago.
At its peak, CAPS accounted for 75 percent of the local healthcare products market and was involved in the manufacture, wholesale distribution, and retail of pharmaceutical, consumer, and veterinary products.
At the time of its closure due to undercapitalisation, huge debt and allegations of mismanagement, CAPS was under the control of key shareholder and chairperson, Fred Mtandah, with the former shareholder also confirming the acquisition.
CAPS joins other organisations that have been bailed out by government through debt assumption like the central bank.
However, analysts have pointed out that debt assumption at the various State enterprises is only cleaning balance sheets and not internal processes that led to the initial chaos.
Zimbabwe’s pharmaceutical industry has experienced a massive decline, with an estimated 90 percent of all pharmaceutical products being donor-funded and imported.
CAPS has ceased manufacturing drugs and failed to have its 15-year lease of Harare’s upmarket St. Anne’s Hospital renewed in 2013, while its QV pharmacy chain has only recently returned to good health under judicial management.
The pharmaceutical group urgently requires $6 million in recapitalisation funds, with the drug-maker currently operating at five percent of installed capacity. Daily News