NRZ faces dim turnaround prospect
LARRY Mavhima, the recently-appointed chairman of the struggling National Railways of Zimbabwe (NRZ), is hoping to change the fortunes of the railway company.
But even before he had settled, he found himself having to deal with a strike action by workers protesting over non-payment of salaries for over 14 months.
The State-owned enterprise, struggling to pay a US$144 million debt, owes the workers more than US$68 million.
Although the parastatal has been trying to raise cash for recapitalisation, these efforts have dismally failed, with recent negotiations with the Development Bank of Southern Africa for US$700 million to fund its rehabilitation having collapsed following the dismissal of its former chairman, Alvord Mabhena, by Transport Minister, Joram Gumbo.
Mavhima came in to replace Mabhena, a seasoned executive with an impeccable professional record in the rail transport industry.
The city in which the NRZ is headquartered, Bulawayo, has itself been the worst affected by a wave of de-industrialisation that has hit the country’s crisis-torn economy since government embarked on a controversial land redistribution exercise in 2000.
The de-industrialisation has since worsened, rendering many of the city’s population jobless.
Estimates from the Ministry of Industry and Trade in 2011 placed the figure of those who had been affected by company closures in the city at nearly 20 000.
The figure is likely to have doubled as company closures in the city accelerated in the last five years. Job cuts were also exacerbated by the Supreme Court ruling last July which allowed employers to terminate employment on a three-month notice.
The city’s once vibrant factories — which fed the troubled rail carrier — are now like empty-shells.
Bulawayo was once proudly known as koNtuthuziyathunqa, or the place of heavy smoke.
This was in reference to the productivity that used to take place in its industrial areas.
This has certainly put Mavhima in a quagmire of sorts: How does he make NRZ work again in a city whose industries have shut done while those that still remain are struggling to survive?
In an interview with the Financial Gazette, Mavhima said the revival of the NRZ would naturally mean that the city of Bulawayo would be the first to benefit from its turnaround.
“It is my strongest desire to ensure that those industries that relied on the NRZ be revived, as long as they are efficient and can add value to the NRZ,” he said.
But so far, he has restive workers to contend with.
Attempts by NRZ management to pacify the workers and convince them to return to work with payments ranging between US$175 and US$300 have failed.
Workers, in January this year, received part-salaries for their December 2014 salaries.
Since then, they have not received any payments.
Many of the workers said they have been reduced to beggars, perpetually pleading for mercy from landlords and schools over unpaid rentals and school fees arrears.
Workers’ unions said they have been patient for too long, trying to give Gumbo an opportunity to address their plight since he took over the Transport Ministry last year.
A deal had been struck earlier this year with unions to start paying workers in March. That promise failed to materialise, fuelling the strike action.
Kamurai Moyo, the Zimbabwe Amalgamated Railway Workers Union president, told the Financial Gazette that management had reneged on their commitment to start paying workers at the end of March.
“It’s not a calculated move against the NRZ chairman; the problems at the NRZ didn’t start either today or yesterday. The employer did not meet the commitment to pay workers at the end of March,” he said about the strike action.
“We only met him (Mavhima) once and like previous chairpersons that we have worked well with, we expect the trend of working well together to continue,” Moyo said.
The NRZ’s agitated workforce of nearly 5 500 workers are not the only immediate challenge that Mavhima faces.
The ailing institution is saddled with operational constraints due to ageing infrastructure, lack of access to funding and the US$144 million debt.
The biggest challenge will be how to pay off the workers over US$68 million owed to them in outstanding salaries.
So far Mavihma’s response to salaries issue has been to indicate that it was regrettable that the workers had downed their tools without notice of the industrial action. “What it means now is that we’re not going to be getting the little income that we’ve been receiving before the strike. It’s not correct to say they’ve not been paid for 15 months. As management, we’re meeting with the workers’ committee representatives to resolve the matter,” he said.
Political commentator, Zibusiso Dube, said the only chance the NRZ had of turning around its operations was by getting a substantial financial injection to capitalise its operations,
“However, even with that boost, the parastatal needs to come up with innovative plans to rebuild, especially in the context of reduced demand owing to reduction in economic productivity in Zimbabwe, and also reduced faith in NRZ from the populace. The NRZ needs capable leadership and some independence from the government which has been known to meddle in parastatals. All in all, therefore, chances of a turnaround are slim,” said Dube.
Unions say a bloated management at NRZ is the root cause of its financial problems.
The number of people in management remains the same as that it had during its prosperous days, when it used to employ nearly 12 000 workers.
“A turnaround doesn’t mean that big changes are needed and must be implemented overnight. You can turnaround the NRZ with the little that you have. In our situation, we have said let’s cut on overtime, promotions and freeze all posts. There is a need to introduce drastic measures and as long as even the shareholder thinks it is still business as usual, then the NRZ will not change. There is a need to face reality,” said Moyo.
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