AAG says Ziscosteel-Essar deal should be reversed


Black empowerment lobby group, Affirmative Action Group (AAG) yesterday told Parliament that government must reverse the acquisition of Redcliff steel maker, Ziscosteel by Essar Africa Holdings, arguing the economy would not gain any significant benefits from the deal in its current structure.

Government agreed to the deal, meant to result in the rebirth of the defunct Kwekwe based steel maker four years ago, but its take-off remains doubtful as no major developments have taken place at the plant to date.

The deal, estimated to be worth $750 million at the time, saw Essar taking up 54 percent of the shareholding in Ziscosteel, with government owing 36 percent and private investors taking the remainder.

Appearing before the parliamentary portfolio committee on indigenisation and empowerment, AAG president Chamu Chiwanza said government had erred by agreeing to the terms of the transaction which were skewed in favour of the investor.

“We are concerned as the AAG about the Essar deal which the good Parliament has chosen to keep quiet about. We felt (the then minister) Welshman Ncube shot from the hip when he signed that deal,” Chiwanza told the committee.

“When we did an analysis as AAG we thought that was daylight robbery as far as us, the indigenous people are concerned and we are lobbying this committee to have the deal reversed with immediate effect.”

Chiwanza said the terms of the deal gave Essar authority to mine, process and export ore for a very long period, estimated at 20 years, which was not commensurate with their investment.

“We can’t just give our ore away to foreigners for such a long time because they have paid debts and paid salaries,” he said.

“The technicalities of the Essar deal are wrong, we mortgaged our resources.”

Away from Essar, Chiwanza said the lobby group was also against the proposed takeover of miller Blue Ribbon Industries by Tanzania’s Bakhresa Group as the milling sector was reserved for locals under the country’s indigenisation laws.

He said Blue Ribbon, like other local companies such as Cairns and Lobels, could be revived by local entrepreneurs.

“We are concerned about continued involvement of foreigners in sectors that are said to be reserved for locals,” he said.

Bakhresa has indicated willingness to inject about $30 million in Blue Ribbon for a 75 percent stake.

Chiwanza accused some locals of fronting for foreigners as a means to circumvent the indigenisation laws which demand that locals own a minimum of 51 percent in any major business enterprise in the country.

“Yes comrade chair, there is fronting without a single doubt,” he said when asked to clarify if he was accusing some locals of involvement in dubious partnerships.

Chiwanza also accused the National Indigenisation and Economic Empowerment Board of corruption in awarding indigenisation compliance certificates.

“Some companies that are said to be indigenised are not indigenised at all,” he said, while urging government to fire the NIEEB chief executive Wilson Gwatiringa and his board.

He said it was imperative that grassroots people in both rural and urban areas also benefit from transparent implementation of the empowerment programmes and not just the elite and well connected.- The Source


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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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