Magwa and Majola tea estates have requested a R400 million bailout from the Eastern Cape government to support the sustainability and maintenance of their operations.
The two estates are wholly owned by the Eastern Cape Provincial Government and managed by the Eastern Cape Rural Development Agency (ECRDA).
Historically significant contributors to the country’s economy, the estates have faced financial struggles for several years, with workers sometimes going without pay for months because of mismanagement.
The estates also employ hundreds of individuals, including women in Lusikisiki and Port St. Johns.
The Department of Rural Development and Agrarian Reform (DRDAR) also provided over R209 million in funding, with a further R60 million set aside in 2019 to assist in rescuing the estates.
Magwa Tea once had a seasonal turnover of R65 million, but was in recent years plagued by corruption, looting and violence fermented by union officials.
In an interview with the SABC, Rabulanana Makutu, general manager of Magwa Tea, stated that the company needs at least half a billion rands over the next three years to restructure the core functions of the business.
"We know what we need to do. We must secure the necessary funds or capital to effectively turn this place around and sustain the much-needed jobs in the economy," Makutu said
"We need at least half a billion rands in the next three years to overhaul the business's core fundamentals from production and processing to retail and wholesale. The entire value chain needs revision."
However, Eastern Cape MEC for Agriculture Nonceba Kontsiwe acknowledged the difficulty in securing such a large amount of funding but confirmed that the provincial government had engaged with the Treasury on the matter.
"We are doing everything we can and have engaged Treasury, but securing this amount is challenging. The available funding would only be allocated over three years, whereas the estates require a once-off amount to achieve their goals.
"We are also exploring alternative options, beyond government support, to help address the issue," she told the public broadcaster.
In 2023 the Democratic Alliance (DA) called on the provincial government to cut its losses in the two plantations, stating that it was time to accept that the project had failed.
IOL Business