Delma Lupepe denies being broke

PROMINENT Bulawayo businessman Delma Lupepe has denied that he is broke but blames the government policy inconsistencies and unrealistic interest rates charged by financial institutions for the demise of most manufacturing firms in the region, including his own.

In as many months, financial institutions have laid siege on his properties in desperate attempts to recover undisclosed debts, leading to swirling rumours that he is technically insolvent.

Merspin is understood to have borrowed $700 000 in 2009 from local banks at 35% interest, but the financial institutions were now demanding over $4 million, including interest charges as high as more than 500% per year.According to Southern Eye , Lupepe rubbished speculation that he was technically broke saying it was unfair for people to blame the operational problems and liquidity crunch facing his Merspin textile firm to mismanagement on his part or his executive.

He charged that some of his firms were operating smoothly.

"I am not broke personally, but everyone knows companies in Bulawayo, Merspin included, are in urgent need of a government bailout," Lupepe said.

"We bought into Merspin at the end of 2005 when it was in provisional liquidation.

"We knew from the onset it needed recapitalisation, particularly new machinery as we inherited obsolete machinery as old as 26 years.

"We tried to secure lines of credit, but we were unsuccessful.

"We ended up seeking bank loans to buy spare parts for the machines premised on the belief that the government would come in to rescue us as part of its empowerment strategy, but nothing materialised."

Lupepe added that out of his seven companies, it was only Merspin that had been afflicted by a myriad of problems.

Lupepe attributed the problems bedevilling the firm to a combination of a number of issues, among them, a general harsh economic climate, targeted sanctions slapped by the West against the country and what the mogul maintains are unrealistically, exorbitant high interest rates which had resulted in asset closures against him as the guarantor of the loans for Merspin by financial institutions.

"The bank charges, the interests have been very unfair to us and we have raised these issues with the government," he said.

"We borrowed in 2009 at interests rates of 35%, but we are being charged as high as 494, 28%. "Also we are unable to service these loans because we are under judiciary liquidation.

"But it appears banks are now a law unto themselves as they push firms into liquidation, which I think goes against economic empowerment and job creation as espoused in the Zanu PF manifesto."

Lupepe said the revival of Bulawayo industries as stated by President Robert Mugabe and underlined in Zanu PF's election manifesto would not succeed if banks were allowed to fast-track the liquidation of local businesses.

"It would appear the banks' stance (auctioning properties of borrowers) is contradictory to Zanu PF's empowerment policies and job creation," he said.

"This is not a normal situation, so the government has to help Bulawayo firms when banks have become law unto themselves.

"We know the government has the ability and capacity to act.

"The government has done it before; it did with new farmers. Why is it not doing it with Bulawayo firms?"

Merspin secured loans from IDBZ (Industrial Development Bank of Zimbabwe), Interfin Merchant Bank, ReNaissance and Premier Banking Corporation (now EcoBank) in a bid to revamp the business, previously one of the biggest exporters of napkins and towels.