EDITORIAL COMMENT: Patrick Chinamasa spot on

Source: EDITORIAL COMMENT: Patrick Chinamasa spot on | The Financial Gazette December 1, 2016

DITHERING government bureaucrats and their political principals are said to have started a process of establishing the cost required to revive the moribund Zimbabwe Iron and Steel Company (Zisco) with the view of determining whether this can be done using local funds or by mobilising external resources.
The Minister of Finance, Patrick Chinamasa, has however made an unexpected admission: Zisco is now a dead asset and should be given to any interested investor for free.
The truth is that we have demonstrated clearly an unwillingness or inability to transform our parastatals to ensure that they add value to the economy.
Instead, what we have done is to destroy assets inherited by Zimbabwe from colonial Rhodesia, looting them to bankruptcy.
Zisco is one such asset: The enterprise sustained Rhodesia, which was under United National sanctions, allowing the regime at that time to deal with the trade embargo.
But what was once one of the continent’s largest integrated steelworks is in ruins, and efforts to revive this giant enterprise, which this year laid off                  1 600 workers, who had gone unpaid for nearly five years, have failed dismally.
Government knows what needs to be done to get Zisco working again.
Before it hammered a takeover deal with Indian conglomerate, Essar Group, through its unit, Essar Africa Holdings Limited (EAHL), an evaluation had been done to ascertain what was needed to restart operations at Zisco, whose furnaces went silent in 2008.
That assessment should have informed EAHL’s strategy in reviving the business: An investment of approximately US$750 million, which included relieving government and Zisco of all their liabilities, which included guaranteed foreign debt; historic liabilities in respect of trade and other creditors — including unpaid salaries and associated benefits owed to the employees — fixed capital investment for reviving the plant to 1,2 million tonnes per annum steel production; and working capital requirements for operations.
Zisco has rich iron ore deposits and it could potentially become the hub of the steel industry in the region, given Zimbabwe’s position in southern Africa.
For nearly 10 years, we have accrued no benefit from Zisco, whose workers are now wallowing in poverty after going for years without work and pay.
Something needs to be done, and Chinamasa’s advice sounds realistic: We should give this asset to an interested global investor for free, and agree on timelines over its revival and job creation.
There is no doubt that the benefits to the economy would be huge.
We also need to re-look at our other failed parastatal businesses like the National Railways of Zimbabwe, the Grain Marketing Board and many others whose contribution to the economy would be vast were it not for the ruinous looting that has ground them down.
These businesses require fresh capital, and it is as clear as daylight that government has no capacity for any form of bailout.
We need to find a way of courting foreign investors to get into these assets to sweat them for our economy.