Zambia Sugar has placed employees on voluntary separation, citing severe economic, commercial and operational challenges which have impacted negatively on the company.

According to a statement issued by Zambia Sugar Communications Manager Sally Namutowe, Monday, managing director Rebecca Kutowa made the announcement saying the company aimed to lose 10 per cent of its workforce.

“The business is facing significant challenges that if left unchecked could bring the company’s operations to a halt. We need to make bold decisions in partnership with employees in order to ensure that we remain afloat in the face of increasing headwinds. The Voluntary Separation Programme is a great opportunity for employees with dreams and aspirations to build a future outside our business and for Zambia Sugar to transform itself into a resilient and thriving organisation,” Namutowe quoted Kutowa as telling employees at a staff forum last week.

“Zambia Sugar is encouraged by the relatively stable macroeconomic fundamentals such as inflation, interest and exchange rates which are essential pre- conditions for growth. However the labour cost has remained high and has impacted negatively on our efforts to bring down our cost base to sustainable levels. Therefore, supported by our Zambia Sugar Board, we took an active decision to turn this situation around; we are certain that through these actions, the business will remain sustainable, and its historic long-term growth and profitability returned in order to continue contributing to the economic stability and development of Zambia’s economy.”

Kutowa stated that the process would run until August 31.

“Zambia Sugar announces today the implementation of an employee Voluntary Separation Programme (VSP) against the background of severe economic, commercial and operational challenges which have impacted negatively on the company. Announcing the news of the VSP in the public domain today, Mrs Katowa, managing director of Zambia Sugar said that the company had decided to partner openly with its employees in order to effect a voluntary separation route which will result in reducing its head count to effect a minimum 10% reduction in its annual wage costs. Employees who decide to accept the VSP terms, will benefit from a once-off cash injection upon departure,” Namutowe stated.

“The VSP process which commenced on Thursday, 5 July 2018 will run until 31st August 2018 and is open to all permanent employees. During the past two years, as the result of ongoing negative operating conditions, the company has posted profit losses over the past two financial years. Apart from the climatic challenges that resulted from partial droughts in the 2015/16 and 2016/17 seasons, the negative impacts of pests and diseases on the company’s and its growers’ cane crop has been significant. There have been at least three bouts of pest and disease attacks which have reduced cane yields and during the past season, resulted in the lowest cane production recorded over the past five years. Cane production has also been impacted by high input costs associated with the purchase of fertilisers, pesticides and cane variety substitution costs. The nature of the sugarcane cultivation is such that the crop will take three to four years to recover.”

She stated that the company had a strong counseling program for employees who decided to take up the voluntary separation offer.

“Most recently, Zambia has recorded an increase in imports of sugar traded at below the cost of production. While the company’s market share has been significantly reduced by the illegally imported sugar, the use of our packaging and branding by unscrupulous individuals has further compromised its brand and market share,” stated Namutowe.

“Zambia Sugar management is confident that the proposed programme will deliver a win-win situation for the business and its employees, noting that the VSP is supported by a strong awareness and counselling programme to assist the employees who decide to accept this voluntary opportunity.”