The mystery of the E700 000 failed teacher's company
About three years ago a group of teachers had a dream. They wanted to have their own business and run a company that would have a separate and distinct identity from their union—The Swaziland National Association of Teachers (SNAT).
That dream turned into reality when Twinkle Star Limited was born around 2018–2019. A group of over 100 teachers each forked out a start-up fee of E3000 that guaranteed them a one percent shareholding in this new company.
Their agenda, as some of them lament in hindsight, was ‘kukhokha thishela enhluphekweni’ (take the teacher out of poverty). The company started with a E700 000 capital armed with an ambitious desire to give a better life to many of the teachers who are wallowing in poverty.
A combination of bad business decisions, poor leadership and such exogenous factors like COVID-19 have all but combined to kill a noble project and in its wake left a bitter, resentful and financial ruined financial scheme.
The idea was that upon registration the Small Enterprises Development Company (SEDCO) would be engaged to help the company with advice on the right business to start and other teething challenges they would encounter. The initial agreement was that none would be allowed to have more than one percent shareholding.
“We agreed that the volunteers who went for the registration would henceforth be our first board of directors; they'll be responsible for kick-starting the company, drafting the necessary working documents like memorandum and getting us operating licences. We all agree on car rental as our first business along with loans then sell chickens,” recalled a teacher who was the founding member of the scheme.
Fast forward to 2021 and the company has crumbled; huge losses on the chicken business they started and many unrepaid soft loans. Calls for a forensic audit to check how a company with huge potentials could end up in a gutter have since emerged. The previous board, led by Lot Vilakati, is largely accused of failing the company and taking poor business decisions.
The new board has acknowledged that the company is in bad shape and that the may be a need to call external auditors to dig deep into the reasons why Twinkle had such a short lifespan.
In acknowledging the challenges facing the company, the new board chairman, Fortune Masina, wrote to the members of the scheme assuring them that they are addressing what he described as a ‘financial crisis.’
“The company has not been doing well and not yet reached a state that shareholders can realise dividends, but be assured that once the crisis is over, we can reassess the dividends. The company had invested money into investments (Car Rental, Soft Loans, Poultry, supermarket) that have not yielded any profit for the company. The losses continued accumulating as a result of car losses due to accidents and unpaid loans by clients, funding of supermarket which has also not yielded profits. The need to honor obligations like rent, and other utilities and keeping operations running have dwindled twinkle initial company capital,” reads Masina’s report.
Masina acknowledged that there were growing calls for the Vilakati led board to be investigated for possible money mismanagement and embezzlement but assured the teachers that the new board would do its own internal audit t to ascertain some of the allegations instead of defaming previous board members with allegations.
A trail of wrong business decisions
A trail of wrong decisions exposed just how difficult to run a business and teaches got this lesson E700 000 later. First, rental cars were taken from the regions and centralised at SNAT Centre in Manzini despite that a majority of customers were from Nhlangano. From thereon there was a lot of resentment about the Vilakati led board and calls for them to step aside grew even louder. However, the board insisted that only a physical meeting, instead of a virtual one, would see a change of leadership. This was at the height of COVID lockdowns.
The previous board understood that the members were getting restless with the direction Twinkle was taking and assured everyone the company would not dissolve. He showed members a E300 000 bank statement as proof that the company was still financially afloat. Few weeks later the company announced that they had bought a shop for E150 000.
Some teachers didn’t support this idea for a number of reasons; one of which was that the board was now viewed with suspicion having made poor business decisions in the past and there were now growing calls for them to change. The idea of the shop proved to be a disaster as it drained Twinkle E3500 per month on rentals only while hardly making E400 daily profits.
Things got worse, one rental car broke down and was eventually repossessed by the garage while another was bought by a board member.
Masina has said as the board theirs was to make the company viable now but acknowledged that there calls for a full audit. He said theirs was to trust their internal audit measures and that if the members insist and money allows they could then call for an external auditor.