Storm over $218m Net-One China loan

via Storm over $218m Net-One China loan 18/09/2014

PARLIAMENT has approved a $218 million Chinese loan deal for a Net-One expansion project with MPs however, calling for a radical managerial shake-up at the company to ensure the money is not put to waste.

The loan, which is part of deals struck by President Robert Mugabe during his state visit to China earlier this month, will see the mobile telecommunications company getting $218 954 843 payable over 20 years.

While approving the loan, MDC-T MP, James Maridadi, warned that if not monitored properly, only a small portion of the money would go towards its intended use with a large chunk being shared by senior executives.

“Mr Speaker we need to monitor how this loan will be used because we have experience with these people. They will buy unnecessary things for themselves and not direct it towards capacitating of their network distribution,” he said.

Maridadi questioned why the government should continue bailing out the company when it was the first to hit the market in the telecommunications industry.

“If we were to look at the audit report from the auditor-general, Net-One was not given a clean bill due to its corporate governance structures. I suggest that they first deal with their management issues and then we can support them,” he said.

MDC-T MP, Jessie Majome, said although she supported the loan advancement to the company, the government as the guarantor of the money, should keep its eyes on the ball and ensure that no “long fingers” dip into the fund and abuse it.

In presenting the motion while seeking approval from parliament, Finance Minister Patrick Chinamasa said the deal was aimed at assisting Net-One to install 1 000 network boosters countrywide.

“We need to change the management there, because since the inception of the company, the same people have been at the helm of the institution and there is nothing new to expect,” he said.

“This company has never declared a dividend and continues to be a drain on treasury,” he said.

But Chinamasa defended Kangai saying he deserved recognition from the MPs since he had steered the company without meaningful funding from government which is the sole shareholder.

“Before I was involved in the negotiations of this loan deal, I had the same questions as asked by Honourable Chimanikire that why is the company failing to declare dividends?

“Honourable Maridadi is talking about being overtaken by other competitors, it’s true, but as government what have we given to management so that they can deliver?” Chinamasa asked.

The Strive Masiyiwa-owned Econet is the leading telecommunications company in Zimbabwe followed by Telecel with the state-owned Net-One at the bottom of the rung.