Triangle announces mass retrenchment amid inflation, VAT challenges, and ‘unfair’ competition

Harare, Zimbabwe | Sugar producer Triangle Limited has announced a three-phase staff retrenchment program, citing escalating operational costs, currency losses, and competition from low-cost, duty-free imported sugar as key factors driving the decision.

In a statement, the company noted that challenges, including inflationary pressures, rising maintenance costs, and the inability to claim VAT on inputs after sugar was exempted from VAT, have significantly strained its operations. Since 2022, Triangle’s profit margins have declined by 55%, while manpower costs have risen by 133% as a proportion of revenue, according to the statement.

The retrenchment process, which will be carried out in phases, begins at the end of February 2025 and will conclude by August 2025.

Managing Director Tendai Masawi expressed regret over the move, describing it as necessary for the company’s survival.

“The current economic environment in Zimbabwe has presented unprecedented challenges for Triangle Limited over the past three years,” Masawi said.

“Escalating operational costs, particularly in areas such as fertilizer, fuel, maintenance costs, and imported goods/services, combined with inflationary pressures, currency losses, the inability to claim VAT on inputs after sugar was exempted from VAT, and competition from low-cost duty-free imported sugar, have severely impacted our ability to sustain current levels of operation.

“Since 2022, we have seen profit margins decline significantly by 55%, manpower costs increasing by 133% as a proportion of revenue, and debt levels rising to unsustainable levels. The company has been unable to generate positive cash flows from its operating activities for the past three years and has faced a very constrained working capital position since the implementation of the revised cane supply arrangements, which has necessitated constant trade-offs between what the business needs and what it can afford.”

“…Despite implementing numerous cost-reduction and revenue-enhancement initiatives, these efforts have proven insufficient to stabilize the business. This decision has been taken to protect the long-term sustainability of our organization and ensure that Triangle Limited continues to play its vital role in Zimbabwe’s economy and the livelihoods of communities in the Lowveld region,” Masawi added.

The company emphasized its commitment to providing fair severance packages and support programs for affected employees. However, the statement did not disclose how many jobs will be affected.

Triangle said the decision is unrelated to the business rescue process of its South African shareholder or its acquisition by the Vision Consortium.

Triangle pledged to work closely with union representatives and other stakeholders to ensure the process is conducted transparently and fairly. This comes as Zimbabwe’s formal sector is buckling under the weight of relentless economic pressures, including inflation, black market access to expensive foreign currency, high operational costs, and policy inconsistencies.

Companies grappling with shrinking profit margins and rising debts, have turned to retrenchments, threatening livelihoods and further weakening an already fragile economy.