SORRY, NO JOB! FACTORY IS CLOSED : THE KTZ PRIVITIZATION SAGA!
By Mubanga Lumpa
The inside of this gate was what used to be the first fully automated cotton cloth plant in Africa.
Kafue Textiles of Zambia (KTZ) started operations in 1969. By the peak of the 1970s, the factory was one of the largest employers in Kafue town. Following its initial start of production, the factory employed about 1,470 workers, both skilled and unskilled workers.
KTZ processed cotton as its major raw material for production in the manufacturing of different types of fabrics (chitenges etc) for both the domestic and exports markets. Most of the cotton used in the production at the factory was grown by the local farmers. However some of the cotton was later imported from Tanzania as the factory expanded its production.
In terms of ownership structure, KTZ was owned by the Zambian Government which owned the majority shares of 55% through the Industrial Development Corporation (INDECO).
The rest of the company’s shareholding was as follows; Texiconsult – Amenito Holdings from Liechtenstein/Italy/ Switzerland 20%, Commonwealth Development Corporation CDC from UK 15% and Barclays Bank from UK 10 %.
However, the level of employment began to drop steadily throughout the 1990s.
Factors such as poor management, alleged rampant theft of materials by workers at the factory and the free market economy which had led to the flooding of cheap textile products and clothing (salaula) on the local market all added to the woes at the factory.
Further, massive retrenchments and redundancies resulting from the structural adjustment program and the privitazation of many state owned entities in Zambia under the MMD government had made things even difficult for parastatals like KTZ to survive.
In 1994, the Zambian government through the Zambia Privatisation Agency (ZPA) had listed KTZ for privatisation as part of Tranche 3 of the sale of state owned companies.
However, despite this offer, no buyers came forth.
By May of 1997, the workforce at KTZ was reduced to about 600 employees as management had sent the majority of the workers on forced leave.
In the years that followed, the process of retrenchments and redundancies at the factory had already started.
Although management at the company had initially committed to paying full redundancy packages for the affected employees, in reality, some workers had only received half (50%) of their benefits by the time the company was finally sold.
The former workers faced little choice but to go back home as destitutes.
Other ex employees had to quickly find alternative means of survival for themselves and their families.
Many former KTZ workers eventually died without ever receiving their full pension benefits.
Meanwhile, as ZPA continued to look for buyers for KTZ, the company’s woes had already depened. Initially ZPA had made five attempts to privatise the company before a purchaser was finally identified in 2003.
In 2005, African Textiles Zambia Ltd, a group of Indian investors purchased KTZ.
The new buyers promised to reinvest in the factory by reconditioning and replacing the machinery at the factory which had remained idle for some years due to operational difficulties.
However, the new owners, African Textiles Limited did not revamp the factory as promised after the purchase.
According to the ministerial statement given in parliament in 2011 on the sale of KTZ by then Minister of Commerce, Trade and Industry in the MMD government, the company generated no revenue during the period 2006 to 2008 and that no money was released to the company for its operational costs by government.
Parliament also heard that during the same period, the old Kafue Textiles of Zambia (KTZ) was in the process of being de-registered as a corprate entity.
Parliament was further informed that at the time of its sale, KTZ was bankrupt as it owed creditors over K182 billion (old currency) and that government had to find ways of dealing with the creditors while preserving the assets and jobs at the company.
Interestingly, by 2008, the financial status of Kafue Textiles Limited under its new owners was that the company had no assets and the Government had no shares in the company.
There were rumors of the company’s machinery been vandalised by the new owners of the factory!
In 2011, the Government constituted a team of experts to probe allegations of stripping machinery at the sold factory by Indian Investors that were entrusted to revamp it.
However, no report of its findings have been made available to the public till today.
When I recently visited the site of the former KTZ factory, I could see overgrown grass outside the entrance of its premises, seemingly suggesting to me “sorry, no job! Factory is closed!”