Monday, July 22, 2024

Zaffico Must Consider Going Into Solar Power Generation

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By Musyani Siame

The Zambia Forest and Forestry Industrial Cooperation (ZAFFICO) is currently in a state of disarray. Its revenue books for roundwood are no longer profitable as timber business continues to deteriorate. One might wonder why this is the case. It is because there are not enough tree stocks for roundwood production. The current stock consists of young stands that can only be sold as Christmas trees.

According the latest ZAFFICO’s Annual Report 2021 ‘’the demand for roundwood has continued to be higher than the supply. During 2021, a total of 265,688m3 of roundwood was felled compared to 336,893m3 felled in 2020 representing a reduction of 21% or 71,205m3. The reduction was significantly attributed to the reduction in pine wood harvest to enable the Corporation move towards attaining the sustainable annual pine roundwood harvest of 110,000m3’’

Even though it has been hard to get financial reports for other years due to the company’s inconsistence of producing them year by year, the decrease in roundwood production has allegedly been very high, flexing around 30 to 40%. This is a huge problem as roundwood is a major revenue stream for the company.
As of now, one way that can help sustain ZAFFICO to be viable again is to diversify into solar energy generation which is viable investment. Why do I say this? ZAFFICO already has enough land in the Copperbelt, Northern, Muchinga and Northwestern provinces. It can use its vast land to build solar power plants. ZAFFICO is already an established company capable of undertaking such projects; all it needs to do is partner with key stakeholders such as ZESCO and other investors in the business to attract capital and get things started.

President Hakainde Hichilema has already created favorable business environment in the energy generation sector by allowing private sector players to participate in power generation. Moreover, solar energy has a ready market, and ZAFFICO may actually profit greatly by exploring this industry. ZAFFICO only needs to develop a business plan for solar energy generation and the partners are already there. ZAFFICO can learn from Huawei Corporation, which transitioned from producing phones to the pig industry as a result of good strategic vision. Interesting story, but in a nutshell, it means it is not too late to add to the company’s mission and see opportunities in the midst of challenges. As a result of the country’ power shortages, ZAFFICO can consider the solar energy business.
Regrettably, when the company acquired capital of over USD $1 million in 2021 a few years ago, it opted to procure highly mechanized central logging equipment that cannot even be used due to insufficient tree stocks, lack of skills to operate the machinery and misplaced priorities. Of course, the move was politically motivated, but it was also primarily due to poor management and board decisions, Lack of strategic planning, and inability to manage the company in a viable manner. This equipment is not fair, not transparent and not accountable hence it cannot be sustainable for roundwood. Anyway, it was wrong investment. ZAFFICO was supposed to be considering viable diversification projects like venturing into solar energy at that time instead.

Power is on demand in Zambia; the venture will not only revitalize the company, but it will also help to reduce load-shedding, which has become, in Bally’s words ‘’an annual ceremony’’ in the country. When compared to roundwood tree plantations, the advantage of venturing into solar power generation are that the business operational costs is lower. While the investments costs are once-off at the start-up stage, the business is profitable throughout the project cycle. So, I believe that solar power generation is the only business that can revitalize ZAFFICO for the next ten years and beyond.
The company cannot afford to wait for years for the young tree stocks to mature. It is not sustainable. On the one hand, there is a workforce to maintain, and on the other, there are operational costs to consider. Where will the funds come from? Considering the empty revenue books from low sales. The few stocks available can no longer sustain the company.

The Industrial Development Cooperation (IDC) tends to mismanage ZAFFICO. For example, ZAFFICO was assigned a project to establish cashew nut plantations in Western Province in September 2018 under PF regime. The company was able to get the project off to a great start and became stable. Unfortunately, IDC decided to take over the project from ZAFFICO and assigned it to Zambezi cashew nut. Meanwhile, ZAFFICO used its manpower, time and resources to implement the project yet did not benefit in anyway and it lost out. In another instance, IDC assigned Kawambwa Tea Company to be managed by ZAFFICO to revive it and resume its operations. As soon as Kawambwa Tea Company was viable, IDC reassigned the tea company to another company at the expense of ZAFFICO’s time and resources. IDC needs to be consistent in manner it runs parastatal company like ZAFFICO to make them profitable and not sink.

2 COMMENTS

  1. But why Zaffico and not Zesco or CEC or REA to got into solar energy production? What experience have Zaffico got with producing power and selling it to the main grid or rural clients? How well spread across the country are Zaffico?

  2. @2020, you are right. Asking ZAFFICO to begin undertaking solar electricity generation is a no brainer. Take that money to Rural Electrification Authority, they have the expertise and mandate to do that.
    Fund ZAFFICO and help them to grow more trees. The article shows that ZAFFICO is abused by IDC when they undertake any projects other than forestry, the same may happen with solar.

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