TRALAC - Trade Law Centre

Namibia: Government Bails Out Failing Garment Factory

Wednesday, 14 September 2005

Source: The Namibian (Windhoek)

Namibia's cabinet has rescued a failing BEE deal, that of uniform-manufacturing company Tropitex, which is controlled by well-known businessman David Imbili.

In terms of a Cabinet Action Letter dated June 28, Government is converting Tropitex's N$2,8 million Development Bank of Namibia (DBN) loan - which has now soared to N$3,5 million with interest - into equity and moving it into the military-owned August 26 company.

This effectively means that August 26 will now inherit Tropitex's obligations to the DBN.

Cabinet also decided on June 28 that Namibia's security forces be compelled to buy all their uniforms from Tropitex Manufacturing (Pty) Ltd.

The Cabinet letter directs that "preferential procurement of textiles be made by law-enforcement agencies" from Tropitex.

This is conditional on the uniforms being of an acceptable quality and price, the Cabinet letter states.

Imbili, a son-in-law of former President Sam Nujoma, appeared to have been bankrolled by means of a US$300 000 (about N$2,8 million at the time) loan from the Development Fund of Namibia (DFN).

All DFN loans were transferred to the DBN when it was created a year ago.

Tropitex was set up by the Ministry of Trade and Industry and Cuba's Ministry of Basic Industry in 2002 as part of a Namibian-Cuban co-operation programme.

The Cabinet move to rescue Tropitex comes after the DBN instituted legal moves to foreclose on the beleaguered joint venture between Imbili's Davitex (51 per cent) and the Cuban-owned Sebradel (49 per cent), for failing to repay Davitex's loans.

Tropitex owns a small factory in Windhoek's Northern Industrial Area, but this appeared to have been dormant for the past few months, neighbours said.

August 26 Holdings (Pty) Ltd is the commercial arm of the Namibian Defence Force, which also owns the Windhoeker Maschinen Fabrik, the now defunct United Africa Garments and several Exclusive Prospecting Licences (EPLs) for diamonds on the Skeleton Coast.

The Ministry of Trade and Industry was mandated to oversee this restructuring and to represent Government's interest in the project.

Imbili's Davitex was to repay its loan in yearly instalments of N$715 154.

However it has turned in losses of N$1 million and N$1,8 million for the subsequent years (2003 and 2004), it has been reported elsewhere.

Imbili, a former insurance salesman, came to public attention in 2000 as the MD of the Namibia Grape Company (NamGrape) and other struggling BEE deals that benefited from Government Institutions Pension Fund (GIPF) financing and other 'soft' Government loans.

About two years ago, August 26, the commercial arm of the Namibia Defence Force, bought out the failing United Africa Garments (UAG) from Haddis Tilahun of the United Africa Group for an undisclosed sum.

UAG ceased operations shortly afterwards, but no figures could be obtained, as August 26 has yet to file any audited financial statements since its inception in 1999.



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