A litmus test for Zim

The Zimbabwe Iron and Steel Company (Zisco) is in the hunt for investors interested in providing funds (equity/debt) to resuscitate the former iron and steel behemoth. 

Government owns 89% in the firm. Zisco wholly owns Buchwa Iron Mining Company which supplies manganiferous iron ore with an installed capacity of 180,000mt per month. 

Zisco also wholly owns downstream company, Lancashire Steel for value adding of steel billets to wire and wire products with an installed capacity of 4,000mt per month, according to an expression of interest notice published last week. 

Investors have to submit expression of interest by April 30. 

It’s the same path investors have travelled before to resuscitate the Redcliff-based Zisco only to be driven away by Zimbabwe’s economic and toxic political environment.  The company stopped production in 2008 weighed down by financial, power and coking coal feedstock supplies constraints. 

This is not the first time that government is scouting for an investor for Zisco. It has received investors, some of them genuine and others fly-by-night.

Had it not been the cheap politicking during the inclusive government, Zisco would have secured an investor in 2011 when Essar Africa came on the scene and committed to paying salaries before the deal was finalised. 

Essar came in but came out burnt after Zimbabwe reneged on the agreement.  

Before then, a fly-by-night firm Global Steel Holdings Limited (GSHL) was touted as Zisco saviour. 

A red carpet was rolled for GSHL after it was given management control of Zisco in 2006 and was supposed to invest US$400m in the parastatal in exchange for a 20-year concession to manage the parastatal under a Reserve Bank of Zimbabwe-sanctioned Rehabilitate, Operate and Transfer deal. 

It came out that the Indian firm was dubious and was facing a lawsuit for improper conduct in Texas, the United States, for receiving the concession to run Nigeria’s Ajaoukuta Steel Company Limited.

Then a Chinese firm R & F Properties came on board and the deal collapsed amid indications the sale of some of Zisco’s assets to ZimCoke could have triggered the exit.

This Zisco deal is a litmus test for Zimbabwe’s seriousness in attracting foreign investors. 

Despite President Emmerson Mnangagwa’s enunciating his Zimbabwe is open for business mantra, investors have not stampeded to the country. They have reasons which authorities have to address.  

What investors want is a stable environment with policy certainty. They don’t need to pay someone to oil the wheel of bureaucracy: the bane of a number of African governments.

They don’t need to go to an office of a top government official or a farm to get approval.

Zimbabwe will be competing with a number of countries for investors.

The deal also tests government’s seriousness in disposing of some parastatals and state owned entities. The wheels have been moving slowly amid indications the entities have become the feeding troughs, an arena where jobs ‘for the boys and girls’ is a pastime.

It is not Zisco that is under the spotlight: Zimbabwe is on “trial”. 

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