Stuck Zisco deal will scare away investors

Trust Chikohora, the immediate past secretary-general of the Common Market for Eastern and Southern Africa and former president of the Zimbabwe National Chamber of Commerce, told delegates at a business conference that the stalled Zisco deal had far-reaching consequences.

“Which investor would want to come and pour money into any business in a country where government has frustrated a $750m deal, where a business deal has taken four years to be implemented?” asked Chikohora.

Essar Africa Holdings in 2010 agreed to buy 54 per cent of Zisco, with the government keeping 36 per cent and 10 per cent owned by minority investors.

The initial plan was to upgrade the existing steel plant in the Midlands and produce 1.2m tonnes of steel.

The deal ran into problems after government refused to transfer mineral rights to New Zim Minerals, previously owned by Zisco. The government has also failed to agree to demands for mechanisms that would allow uninterrupted electricity supply from Munyati power station and an undisturbed supply of coal from Hwange Colliery.

Chikohora said when investors were considering a destination for their money, they always read its history and assessed confidence and security before embarking on business. He urged government to ensure the Zisco deal was immediately implemented to save the face of the nation and to stimulate business ventures that could be driven by steel production.

Former finance minister Tendai Biti previously said that Zisco, when fully operational, had the capacity for products worth $1bn a year and could employ thousands of locals currently desperate to find a means of survival.

Steel is currently imported from South Africa.

“The Zisco deal is like a low-lying fruit. It’s there. What is just needed is implementation. The sticking points are known by both parties and it is just government that should honour its promises and ensure everything kick-starts. We do not want to give an impression that investing in Zimbabwe is full of risks. If that happened our economy would never grow,” said Chikohora.

In March, Indian ambassador Jeitendra Tripathi told delegates at the Zimbabwe National Chamber of Commerce Kwekwe branch business luncheon that there were senior government officials with interests in Zisco who were scuttling the deal. He also warned that continued stalling had the potential to derail the country’s prospects for courting international investors.