In a move that underscores the dire state of Zimbabwe’s economy, Triangle Limited, a leading sugar producer, has announced a phased retrenchment of its workforce due to severe economic challenges facing the southern African country.
According to a statement released by the company, the retrenchment exercise is aimed at reducing operational costs and ensuring the long-term sustainability of the business.
The company cited escalating operational costs, inflationary pressures, and currency losses as major factors contributing to its financial woes.
The retrenchment process, which is expected to be completed in three phases by August 2025, will see an undisclosed number of workers lose their jobs. The company has promised to provide fair severance packages and support programs to affected employees.
“The current economic environment in Zimbabwe has presented unprecedented challenges for Triangle Limited over the past [three] years.
“Escalating operational costs, particularly in areas such as fertilizer, fuel, maintenance costs and imported goods/services, combined with inflationary pressures, currency losses, the inability to claim VAT on inputs after sugar was exempted from VAT, and competition from low cost duty-free imported sugar, have severely impacted our ability to sustain current levels of operation,” Tendai Masawi, the company’s Managing Director said.
“Since 2022 we have seen profit margins decline significantly by 55%, manpower costs increasing by 133% as a proportion of revenue, and debt levels rising to unsustainable levels.
“The company has been unable to generate positive cash flows from its operating activities for the past three years, and has faced a very constrained working capital position since the implementation of the revised cane supply arrangements, which has necessitated constant trade-off between what the business needs and what it can afford.
“These financial realities underscore the urgent need for corrective action so that the business can generate sufficient cash flows to reduce debt and reinvest in its future.
“While we have managed to address the declining trend in sugar production, our cost of producing sugar remains significantly higher than regional benchmarks, which is no longer sustainable.
“Ongoing discussions with stakeholders regarding the division of proceeds among farmers and millers, as well as continued pressure for adjustments to wage agreements may further strain our financial outlook.”
The retrenchment exercise is likely to exacerbate the country’s already high unemployment rate. The move is also expected to have a ripple effect on the local economy, particularly in the Lowveld region, where Triangle Limited is a major employer.
The Zimbabwean government has been struggling to revive the economy, which has been on life support for years.
The country’s economic challenges have been exacerbated by a series of factors, including drought, power shortages, and a decline in key sectors such as agriculture, manufacturing and government corruption.
Triangle is wholly owned by Tongaat Hulett, with the company holding 100 percent of its shares. Tongaat has a majority stake in Hippo Valley Estates, owning 50.35 percent of the company’s shares.
Additionally, Hippo Valley Estates and Triangle Sugar Corporation are joint shareholders in Mkwasine Estate, with each holding an equal stake in the venture.
