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Opinion / Columnist

The death of Zimbabwean economic giants

01 Feb 2019 at 14:16hrs | Views
ZiscoSteel Plant, Redcliff, Kwekwe.
The market landscape of any country is shaped by a few companies that underpin socio-economic activities of that particular nation. These companies are mirrored on the competitive advantages that the country has over its peers regionally or in the global market. The history of Zimbabwe had such giants in ZiscoSteel, ZimAlloys, Hwange Colliery, Shabanie-Mashava Mines and National Railways of Zimbabwe (NRZ). These 5 entities employed thousands directly and millions indirectly in the local economy from consumers, suppliers, transporters, distributors, retailers, engineering contractors, consultants, financiers and others. The entities sustained all from families, communities, town councils, urban settlements, government and the economy itself. The giants had weathered decades of storms during the colonial era and UDI while revolving with time into the new Zimbabwe in 1980.

The first 10 years after independence presented a few transitional challenges in terms of funding and management but these were outweighed by the inertia built over years. Post 1990; Gross negligence, mismanagement, political squabbles and corruption combined to turn these giants into derelicts with millions of debts. Falling commodity prices and globalization could have had a hand in their downfall but history had demonstrated that these entities were too big to fall. The downfall of these entities has condemned thousands of families into poverty and their plant infrastructure into ghost towns. Thousands of businesses that heavily relied on their existence are either closed or struggling for survival in the local harsh economy. For them, life has never been the same despite numerous empty promises and lucrative turnaround deals.
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Company                (Specialty)

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Peak Employment (Historic)

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Indirect Employment (Est)

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Peak    Production Capacity (Tons/Yr

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Peak           Export    Capacity (Tons/Yr)

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Current Production   Output (Tons/Yr)  

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ZiscoSteel                                  (Steel Manufacturing)

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5,500

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50,000

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1,000,000t

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700,000t

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0

Hwange (Coal Mining)

4,800

40,000

6,000,000t

200,000t

3,000,000t

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NRZ (Rail Transportation)

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20,000

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250,000

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14,000,000t

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5,000,000t

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3,500,000t

Shabanie-Mashava        (Asbestos Mining)

6,000

25,000

240,000t

150,000t

0

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ZimAlloys                   (Ferrochrome Production)

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1,000

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8,000

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125,000t

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50,000t

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0

Employment Totals

37,300

373,000

 

 

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The interconnection between these 5 entities was so strong that an improvement in production capacity for any one of them would directly benefit others in a short space of time and the reverse. ZimAlloys produced ferrochrome that was used in steel production by ZiscoSteel and various other steel products in the local market. Coal from Hwange Colliery was used in heating blast furnaces for ZiscoSteel and ZimAlloys. Asbestos and its by-products from Shabanie-Mashava was used for heat insulation and roofing by ZimAlloys, Hwange and ZiscoSteel. In all this NRZ provided transportation to and from the point of production at the lowest rates possible and in turn relied on these entities for 80% of its business.

Direct dependents in the local economy include Turnall Holdings (Uses Asbestos Fibre from Shabanie-Mashava in roofing and piping production), ZESA (Thermal electricity generation through coal produced by Hwange), Sable Chemicals (Uses Ammonia, a by-product from ZiscoSteel and Coal from Hwange in gasification for fertilizer production), ZimChem (Uses coal by-products to produce solvents and tar), GMB (Relies heavily on NRZ for transportation of wheat, maize and soya), ZIMASCO (Supplies chrome to ZimAlloys and ZiscoSteel used in steel production through NRZ), Bimco (Major supplier of limestone to ZiscoSteel), Steel Makers Redcliff, Lancashire Steel, Frontier Steel, Midlands Metal, Haggie Rand and Zimcast Gweru (Used ferrochrome and Steel from ZiscoSteel in making various steel products), Buchwa Mine, Ripple Creek and Mwanesi Mine (All supplied iron ore to ZiscoSteel through NRZ) and ZimGlass (Relied mainly on NRZ transportation to ferry silica and ZESA to make glass). All these companies had to downsize to survive, switch to imports for raw materials or close shop.

It has taken long for the government and authorities to realize the significance of bailing out or privatizing these giants especially ZiscoSteel. In essence, organizations that defined economic activity in specific towns such as Gweru, Shurugwi, Kwekwe, Redcliff, Bulawayo, Hwange, Zvishavane, Masvingo and Mashava have been left to collapse.

The importance of these entities to the Zimbabwean economy cannot be overemphasized as various pieces have already been written to compel the government to expedite various funding deals. Currently the country imports steel products and roofing material worth over $450 million per year while foregoing over $2 billion in foreign currency earnings that could come from ferrochrome, chrysotile asbestos, steel and coal exports in the region and beyond. Millions of livelihoods directly or indirectly depend on the re-awakening of these giants. The government has to be moved to act now either for economic purposes which range from salvaging tax revenue sources, infrastructure rehabilitation, foreign currency earnings and savings or purely social protection purposes for the communities that rely on the resuscitation of these Zimbabwean giants.  

Victor Bhoroma is business and economic analyst with expertise in business management aspects. He is a marketer by profession and holds an MBA from the University of Zimbabwe (UZ). For feedback, mail him on vbhoroma@gmail.com or alternatively follow him on Twitter @VictorBhoroma1.

Source - Victor Bhoroma
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