Source: Dairibord pumps US$11,8m into capital project amid costly borrowing – herald
Tapiwanashe Mangwiro
Senior Business Reporter
Dairibord Holdings stepped up its capital investment drive in 2025, committing US$11,83 million towards expanding capacity, improving efficiency and lowering long-term operating costs, signalling growing confidence in Zimbabwe’s recovering dairy and beverages market.
The group’s latest financials showed a deliberate tilt towards production-led growth.
“A deliberate and strategically targeted program to expand productive capacity across key product lines was undertaken. Plant and machinery received and fully commissioned in 2025 amounted to US$10,71 million with prepayments for plant and machinery not yet received at year’s end amounting to US$1,12 million,” the company said.
At the centre of the investment programme was a US$4,2 million Steri milk plant, which was commissioned in December 2025 and was expected to significantly enhance processing capacity while extending product shelf life.
Management viewed the project as a strategic response to shifting consumer demand towards long-life dairy products, particularly in a market still constrained by cold-chain limitations.
Alongside this, the company invested US$2,9 million into a new Cascade beverages bottling line, also commissioned in December, aimed at strengthening its position in the non-dairy segment. The beverages unit had increasingly become a key growth pillar, offering diversification away from raw milk supply volatility.
A further US$0,51 million was channelled into refurbishing the Pfuko maheu line, underscoring Dairibord’s focus on revitalising traditional product categories that continued to enjoy strong domestic demand.
Complementing the core manufacturing upgrades was a 1-megawatt solar project in Chipinge, commissioned in October 2025.
The installation was designed to reduce reliance on the national grid, lower energy costs and mitigate power supply disruptions, which had long been cited as a major constraint to industrial productivity in Zimbabwe.
The capital expenditure programme was largely funded through borrowings, which rose sharply over the period. Short-term loans increased to US$3,67 million from US$1,45 million in the prior year, while long-term obligations climbed to US$7,96 million, up from US$4,16 million.
“The loans, secured against company assets including plant, machinery and receivables valued at US$9,2 million, carried interest rates ranging between 45 percent and 47 percent for Zimbabwe-dollar facilities and between 8 percent and 12 percent for US dollar-denominated debt,” the company added.
Investment analyst Mr Daniel Mazhambe said the scale and focus of the capital programme had been a strong indicator that Dairibord was positioning itself for sustained recovery.
“This was a business investing ahead of the curve. The emphasis on processing capacity, product diversification and energy self-sufficiency spoke to a long-term strategy rather than short-term survival,” Mr Mazhambe said.
“Importantly, these investments came at a time when demand fundamentals were gradually improving.”
However, he cautioned that the cost of capital remained a structural challenge.
“Interest rates, particularly on local currency facilities, were still punitive. If that persisted, it risked slowing the pace at which companies could modernise and expand. The danger was that the industry might struggle to fully capitalise on the recovery momentum.”
Fellow analyst Ms Nomsa Makufa echoed the optimism, noting that the investments had aligned with a broader rebound in Zimbabwe’s manufacturing sector.
“We were seeing production volumes in several sub-sectors inch closer to pre-2000 levels, and Dairibord’s capex programme was consistent with that trend,” she said.
“The company was effectively rebuilding capacity that had been eroded over the years.”
Ms Makufa added that the solar investment had been particularly significant in the operating environment at the time.
“Energy reliability was critical for food processing businesses. Through investing in solar, Dairibord was not only reducing costs but also insulating itself from supply shocks, which could be very disruptive.”
Still, she warned that financing conditions could temper the sector’s resurgence.
“High borrowing costs remained a major constraint. If funding had become more affordable, we could have seen a much faster recovery across the industry. Without that, progress would likely have remained gradual.”
Dairibord’s 2025 capital expenditure programme ultimately reflected a company that had bet on growth, even as it navigated a complex financing landscape.
The challenge lay in translating that investment into higher volumes, improved margins and a stronger competitive position in a market that was slowly finding its footing again.
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