Source: I won’t tolerate corruption in new Zisco revival deal – The Zimbabwe Independent
IN the past two weeks, the Zimbabwe Independent has reported on the government’s efforts to revive the defunct Ziscosteel which was brought down mainly by systemic high-level corruption and plunder. At its peak, Ziscosteel was a regional steel-making giant and one of the main pillars of the national economy. A fortnight ago, cabinet appointed a special taskforce, chaired by Industry and Commerce minister Sekai Nzenza, to spearhead the company’s revival.
The public is generally sceptical of the government’s organisational capacity to spearhead such a project, in view of past corruption and incompetence. Our chief reporter, Andrew Kunambura (AK) had a chat this week with Nzenza (SN, pictured), who confirmed the developments in an in-depth interview. Below are excerpts of the interview:
AK: We understand you have been tasked with the responsibility of overseeing the revival of Ziscosteel by cabinet. Can you give a brief outline of the scope of work?
SN: Cabinet set up an inter-ministerial taskforce, which I chair, to resuscitate Zisco. Among other things, we were tasked to review the Zimcoke deal, scout for an investor for Zisco, urgently resuscitate subsidiaries of Zisco (Lancashire Steel, Buchwa Mining Company and Zimchem), debt management and addressing security issues at Zisco.
AK: Since the creation of the taskforce which you chair, what progress have you made?
SN: We had our first meeting on the 4th of June 2020 and we received the report from the working party made up of the technocrats from the AG (Attorney-General)’s Office, ministerial taskforce, Zisco board, ZIDA (Zimbabwe Development Agency) and SERA (State Enterprises Restructuring Agency).
Since it was our first meeting, it was much more to do with agreeing on the roadmap in attending to the terms of references. I must say we all agreed on what must be done.
Specifically, we agreed to separate what must be done by the board and ministerial taskforce.
For example, we agreed that the board must tackle the issues related to debt management, security issues at Zisco and development of a business plan with a view to restarting the units under Zisco.
AK: You are scouting for a strategic partner for the revival. Are you in a position to tell which countries you are focussing on? In that connection, have there been any expressions of interest as yet?
SN: We are in a global village and, as such, we are open-minded. Yes, we have received expression of interest which we are considering at the moment, but I would like to say that, at the moment, we will keep the name to our chest.
AK: We hear the steel plant is derelict and the machinery is either obsolete or worn out. Is this the true state of affairs at Zisco?
SN: The correct position is that there are some sections of Zisco which are totally obsolete. I am sure you appreciate that Zisco was established during the Rhodesian time.
However, there are some plants which are in good shape. Interestingly, latest investments, in terms of plant equipment, which were done in the late 1990s, were never used to their potential and when you go down there you will appreciate that it’s dead capital lying idle. So, to say the whole Zisco is obsolete is a total lie.
AK: There are other companies which used to operate as a unit with Zisco. What is the plan with such companies?
SN: As I alluded earlier, the companies which are under Zisco, that is Lancashire Steel, Zimchem and BIMCO, are the main targets for urgent revival.
The ministerial taskforce has requested the board to oversee the development of the business plan as a matter of urgency.
AK: Currently, there are no workers at any level at the company. What is your strategy in this respect?
SN: There are workers mainly at management level. I must say we have a lean structure which is mainly overseeing the security of the company. The company also has 243 workers who are security guards whose main job is to provide security to the company assets.
AK: In terms of your team’s assessment, how much money is required to bring the company back to life?
SN: It depends of the model one may need to take. Based on our assessment, if one is going to go with the current structure of Zisco, one may require investment level in region of US$500 million at the very minimum.
However, if one wants to put totally new plant, the correct figure can then be informed by feasibility studies.
AK: Previous deals have collapsed following allegations of corruption and the government’s insistence on maintaining majority shareholding in the firm. How are you planning to circumvent these obstacles?
SN: For starters, previous deals did not collapse squarely on corruption and the need by government to maintain majority shareholding.
I understand issues like red tape, snail’s pace in concluding the investment deal and changes in global prices of iron products made significant contribution in the collapse of the deals. I am saying this so that we understand the total picture which will also help us to give adequate response.
However, in dealing with these impediments, in line with the echoes of the Second Republic in opening Zimbabwe for business, my ministry will not tolerate corruption. Working with ZIDA, we will provide quick turnaround on investment appraisals.
The question as to whether government interests in Zisco will be an impediment, in my view, it’s debatable because you will see that in most countries, if not all, because of the strategic nature of the steel companies, government is the major shareholder, but you still see investors coming in. So, it is a question of return on investment more than anything else. This is why the whole government machinery is working on the reforms and we are happy that ZIDA is up and running.
AK: How long do you think it will take for you to finalise this project?
SN: I cannot be specific because scouting for an investor is not an overnight event. However, I must emphasise that we are treating this project with the urgency it deserves.
AK: Given the ongoing currency instability in Zimbabwe, what assurance would you give a foreign investor seeking to bring money into Zisco?
SN: The currency instability is caused by lack of production. Bringing an investor into Zisco, which is an anchor company, is part of the process to stabilise the currency because this will be a game-changer.
AK: Government has also been widely accused of failing to expedite such deals. What would you do differently?
SN: I think I have adequately addressed this.
AK: You may add any other relevant information, particularly with respect to what you have achieved so far.
SN: With respect to Zisco, working with the board, we have been able to clear salary arrears of workers and I must say we are up to date as of today. This has gone a long way in cleaning the balance sheet of the company.
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