Zisco shutdown deprives Zim of $20bn — Study

via Zisco shutdown deprives Zim of $20bn — Study – DailyNews Live 9 July 2014

HARARE – Zimbabwe has lost over $20 billion in potential revenue since 2008 due to the closure of Ziscosteel, a recent study shows.

According to the latest report by the Zimbabwe Economic Policy Analysis and Research Unit (Zeparu) on engineering and metals industries value chain analysis showed that the demise of Zisco deprived the engineering and metal products sector of over $3 billion in revenue per annum.

Once the largest integrated steel works in the region, Ziscosteel shut down in 2008 due to alleged gross mismanagement and failure to upgrade equipment. However, the company is set for re-opening this year following the injection of nearly $700 million in 2011 by an Indian firm Essar Africa Holdings.

Zeparu noted that the resuscitation of the iron and steel production alone had the potential to turn the trade deficit into gain.

This comes as the study showed that for more than five years Zimbabwe’s engineering and metals sector has failed to be competitive globally.

“The sector had an overall trade deficit of about $3,3 billion for the period 2008 to 2012, translating into an average deficit of about ($660 million per year). It was also revealed that the exports constituted 41 percent of $7 billion total trade against 59 percent of $10 billion imports over the same period.

“The overall trade deficit was attributed to the engineering goods subsector which had a huge trade deficit of about $8,1 billion ($1,6 billion per year) despite a trade gain of $4,8 billion ($960 million per year) for the metals and metal products sector,” said the report.

Zeparu noted that while the metals and metal products contributed about 94 percent ($6,7 billion) of the exported engineering and metals commodities, engineering goods constituted 82 percent ($8,6 billion) of imports.

“The main exports were precious metals, base metals, ores and iron and steel, whilst the main imports were vehicles and components, machinery, boilers, equipment, parts and electrical and electronic machinery and parts,” read the report.

The trade figures therefore showed that the engineering sector has almost collapsed while the primary production is flourishing.

“The resuscitation of the engineering sector as well as an export led industrial growth to maximise value addition and beneficiation as well as turn around the trade deficit in-line with the national trade policy must be done urgently,” said Zeparu.

Zeparu’s study also revealed that the country had good policy documents like Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), the Industrial Development and National Trade Policy to spearhead economic growth.

Nevertheless, the implementing frameworks were not coherent and the implementing vehicles were not synchronised.

This comes as government and Essar Africa Holdings have renegotiated an improved Zisco deal, providing for a complete overhaul of the company’s equipment that has been lying idle for years.