THE Eastern Cape government has injected a total of R65-million into the province’s two troubled and cashstrapped tea estates based in the former Transkei.

It emerged yesterday the rural development and agrarian reform department allocated Magwa Tea Estate in Lusikisiki R60-million for its turnaround plan while the Majola Tea Estate in Port St Johns received R5-million to bolster administration and management.

The allocations are in addition to the R42-million Magwa Tea Estate received last year from national government for its turnaround plan after production came to a halt following incidents of violence and looting amid a labour dispute.

The Majola Tea Estate cash injection is despite R5-million being promised to it in the last financial year but never transferred as audited financial statements were not submitted.

Speaking at the portfolio committee in the Bhisho Legislature yesterday, the provincial department’s Kowie Joubert said Magwa’s funding sought to address critical challenges.

“A total amount of R60-million is allocated to the estate and consists of an allocation from the department of rural development and land reform of R26-million in terms of the recapitalisation programme,” said Joubert.

“This amount is mainly focused at getting the primary production of tea normalised in terms of fertiliser, equipment and basic repairs.”

Joubert said of the amount, R34million would be used for the turnaround plan through the introduction of strategic partners to manage the estate and administer the funding.

“The remainder of the funds are earmarked to sustain the salary bill of the estate during the period wherein it cannot generate sufficient income by itself,” he said in reference to the R1.2-million monthly salary bill.

Joubert said the R5-million allocated to Majola was aimed at improving administrative and management weakness to avoid liquidation.

“If they are liquidated there will be quite a lot of jobs that could be jeopardised,” he said.

But the funding received a lukewarm response from shocked members of the portfolio committee.

Committee chairman Phila Nkayi was concerned whether the funding would change the fortunes of the estates.

“Can we say for sure if you give these amounts to these entities tomorrow you will have production going, because experience has been these funds are meant to pay staff salaries.”

The UDM’S Jackson Bici was equally shocked and said there was no value for the funding being pumped into the estates.

“In June last year R42-million was paid to Magwa and now we pay R60-million to make it R102million. To me there is no value for money,” Bici said.

“The acting CEO is about to leave or has left. There is no production, and if there is any, there is very little. Why do we continue pouring money in?” he asked.

The DA’S Veliswa Mvenya said it was astonishing R5-million was again allocated to Majola yet the same amount was never transferred in the previous financial year.

“Is it not going to be the same case this year?” Mvenya said.

While defending the allocations, departmental head Glen Thomas confirmed previous funding to the estates had been going into a “bottomless pit”.


“I agree what has been happening over the years in Magwa has been simply to put money in a bottomless pit and it is for that reason we are talking of a turnaround plan for Magwa because we can’t keep on putting money into an operation that is not productive.”

Thomas said funding for Magwa’s salaries had been by default.

“Technically and legally speaking Magwa has never been a public entity of the department.

“It has always been a subsidiary of the Eastern Cape Development Corporation.”

Thomas said diversification of production would be considered.

Regarding the R5-million allocated for Majola Tea Estate, the department’s Felix Hobson said: “I don’t think it is going to run into the same problem we ran into previously.”

Pressed as to why the previous allocation was never transferred, acting CFO Nokwanda Tungata said : “I am the acting CFO but I am going to establish that and give a full report on what happened.” — mayibongwem@dispatch.co.za