Auctions boom in Zim as Tongaat, Metallon and others default

Auction companies are booming in Zimbabwe as companies and individuals - including Tongaat Hulett CEO Sydney Mutsambiwa and Mzi Khumalo's Metallon Corporation - default on loan payments or other financial obligations.

The booming auctioning industry is unique in a country where companies in other sectors such as mining, construction and manufacturing are struggling for survival owing to foreign currency shortages.

Various properties, including hotels, residential and commercial stands and mining equipment, have been going under the hammer in the past few weeks. These include the Courtney Hotel in Harare and various housing properties being auctioned by banks.

Those set to lose properties include Tongaat Hulett chief executive officer, Sydney Mutsambiwa, whose Euro Leopard 650 Tractor is being sold by public auction by the Sanyati Rural District Council. Mutsambiwa and seven others will have their properties and belongings auctioned by the council on December 1, 2018.

"We auction all sorts of properties and equipment, property and vehicles, and even household and office goods. There has been an increase, especially since the start of the second half of the year," said a receptionist at a Harare auction company.

Earlier this month, Metallon Gold’s Mazowe mine had its underground hoist and main plant auctioned on behalf of the Zimbabwe Electricity Transmission And Distribution Company. Various banks in Zimbabwe have also been auctioning off properties over loan defaults, giving rise to a booming auctioning industry in the country.

Zimbabwe's economy has continued to balk under worsening conditions, although the country has started to informally re-dollarise, as the bond notes also accepted as legal tender continue to lose value.

Some companies have also been struggling to pay employees on time, as others have accrued unsustainable backlogs. Local reports show that Courtney Hotel has been dragged into litigation by its employees.

A notice in local press, calling for interested bidders, refers to "a matter between Jameson Chinyan’anya and 36 others vs. Courtney Hotel Private Limited" in which a "certain piece of land situated in the district of Salisbury (Harare) called Stand 15129, also known as Courtney Hotel," is being auctioned off.

Even bigger companies, such as Meikles Limited - which has a partnership with Pick 'n Pay in Zimbabwe’s TM Supermarkets - have also been defaulting on loans. In September, Meikles said it was now subject to litigation over two overdue loans, owed to government related finance institutions and amounting to $5m.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 836 votes
It depends on how the funds are used.
74% - 5554 votes
No. We should have gotten the loan elsewhere.
15% - 1111 votes