Happiness Zengeni and Munashe Matambo
Zimre Holdings Limited says it will remain an active investor in the Zimbabwe United Passenger Company (ZUPCO) in spite of current shareholder disagreements that suggest Government might not be fully recognising its shareholding.
Zimre is a 49 percent shareholder in the ailing transport company, a stake it acquired from United Transport Group, the original owners of ZUPCO, in 1995. Government holds the remaining 51 percent. ZUPCO had started off as the Salisbury United Omnibus Company owned by a London-based group but later incorporated the Salisbury municipality to form the present day company. It was once listed on the stock exchange.
Well-placed sources told Business Times that discussions are underway between Zimre, a former government-controlled company and the Ministry of Local Government, Public Works and National Housing on the right path to follow amid indications, Government could be suggesting that the Zimbabwe Stock Exchange listed company could have lost its shareholding by prescription. There is also an argument that Government has for the better part of two decades sustained operations at the transport parastatal while Zimre was passive.
ZUPCO is one of the parastatals that are targeted for partial privatisation or a ZSE listing by the Ministry of Finance and Economic Development as part of broad-based reform process.
Zimre CEO Stan Kudenga told Business Times that the insurance company would be happy to retain its shareholding in the company under a public private partnership (PPP), a position which would be in line with Government’s vision of revitalising state enterprises.
“We are happy either way to work with Government as we believe ZUPCO is a good investment for urban transport development. We can also accept a fair value price but now we will remain an active investor.”
ZUPCO only has a stock of 120 buses mainly servicing the rural areas. This is against 400 buses the company had in 2005. The fortunes of the parastatal started to wane when public transport deregulation in Zimbabwe was given impetus by the introduction of the Economic Structural Adjustment Programme (ESAP) in 1900.
Deregulation, which was implemented in 1993 allowed private owners operating buses, named “Commuter omnibuses” to enter the urban public transport sector to augment services hitherto provided by the single company, ZUPCO.
A lot of vehicles entered the urban public transport market through this initiative.
Zimre believes overall that there is a good investment case in mass public transportation. The same sentiment was also echoed by renowned Town Planner Percy Toriro who said done correctly ZUPCO is ideally a profitable parastatal. According to him, it would also be the most ideal to fix the current congestion in the city.
“No city in Zimbabwe at the moment has a scheduled bus service. People need to know the times of departures and arrivals as they all go to different destinations. Some hospitals, some schools, some meetings and so on,”
Toriro says the commuter omnibuses (kombis) that have flooded the urban areas at the moment are creating a lot of congestion.
He added that since the ZUPCO was once a successful public service in the country, it is wiser to bring it back to its position.
“It is critical for ZUPCO to be assisted in order to function quite well,” he added.
ZUPCO has had its fair share of corruption scandals typical of any parastatal. It has also been criticized by local vehicle assemblers over its failure to adhere to Government procurement policy.
This was demonstrated when the ZUPCO chief executive Clifford Muwoni recently told the press that the bus company will be shopping for buses from South Africa.