Online ReporterNqobile Bhebhe Zimpapers Business Hub
MUTAPA Investment Fund (MIF) says strengthening corporate governance, clearing outstanding audits and improving commercial performance are critical to unlocking fresh capital for the National Railways of Zimbabwe (NRZ) as the State-owned railway pursues a major turnaround.
Zimbabwe’s sovereign wealth fund, which now oversees NRZ, said capital mobilisation must go hand-in-hand with governance reforms if the railway operator is to attract public and private investment needed to restore its operational capacity and reclaim its strategic role in Zimbabwe’s logistics economy.
Speaking at the 9th and 10th Annual General Meetings of NRZ in Bulawayo yesterday, MIF cluster head for portfolio companies in the transport sector, Ms Chiedza Mudzingwa, said the shareholder was working closely with NRZ to secure funding for locomotives, wagons, workshops and critical infrastructure.
The emphasis on governance comes as NRZ seeks to raise significant capital after years of under-investment and ageing equipment.
A few weeks ago, NRZ commissioned three refurbished locomotives and 100 wagons in Harare following a US$2,5 million injection from mining and smelting giant Zimasco under a public-private partnership (PPP).
Zimasco funded the procurement of critical spares and consumables valued at approximately US$2,46 million, with the refurbishment undertaken at NRZ’s Bulawayo Mechanical Workshops.
The programme, which includes wheel profiling to improve the durability, reliability and safety of rolling stock, forms part of the Government’s National Development Strategy 2 drive to strengthen private-sector participation and restore the railway network.
The Zimasco deal is the latest in a series of partnerships aimed at rebuilding NRZ, which has faced years of under-investment and declining operating capacity.
Another PPP involving NRZ and Beitbridge Bulawayo Railway (BBR), a unit of South African logistics group Grindrod, was commissioned in July, with Zimbabwean logistics firm Silvergill also involved.
The partnership facilitated the launch of lithium concentrate exports from Gwanda Lithium Mine to the Port of Maputo in Mozambique, with the first freight train carrying 1 000 tonnes departing from the newly commissioned BBR West Nicholson siding.
Against this backdrop, NRZ is pursuing a much larger recapitalisation programme, with MIF negotiating a US$115 million Afreximbank facility to acquire 10 locomotives and 315 wagons and rehabilitate critical infrastructure.
A separate US$6 million package will support the refurbishment of 520 wagons and maintenance equipment.
The scale of the planned investment reflects the depth of NRZ’s capacity constraints, with freight annual volumes having fallen from 12,4 million tonnes in 1998 to about 2,03 million tonnes in 2025.
NRZ is targeting 3,01 million tonnes in 2026 and 12 million tonnes by 2030, pointing to an ambitious recovery in the railway’s contribution to Zimbabwe’s logistics and export economy.
Ms Mudzingwa said governance would be fundamental to this capital mobilisation effort, particularly as NRZ seeks strategic partners and funding.
“The completion of these borders and the holding of these AGMs are important steps in strengthening NRZ’s governance and accountability.
“The annual reports themselves recognise the effective corporate governance, transparency and accountability that are fundamental to the sustainable growth of this organisation. However, we remain behind.
“The immediate priority must therefore be to complete the 2024 and 2025 audits and all the respective agents so that NRZ becomes fully compliant and encouraged with its statutory reporting obligations.
“Governance is the foundation of any successful turnaround and is particularly important as we seek to attract funding for strategic partners for NRZ,” said Ms Mudzingwa.
She said while the AGMs were dealing with historical financial periods, the shareholders’ focus was now on rebuilding NRZ’s capacity.
“While today’s meeting considers historical financial periods, our focus as shareholders is firmly on the future. NRZ’s greatest business risk remains its capacity to expand.”
“The 2022 and 2023 reports highlighted shortages of locomotives and wagons, maintenance backlogs and deteriorating rail infrastructure as major constraints to the business.
“Addressing these constraints is therefore central to restoring NRZ’s operational and financial performance.”
Ms Mudzingwa said the railway company had shown signs of recovery after a difficult start to the year.
“We are, however, encouraged by the improvement in business since the end of the second quarter.
“This recovery is promising and demonstrates the opportunity available to NRZ if we can provide the capacity required to serve this market,” she said.
Ms Mudzingwa said the Zimasco PPP demonstrated how commercially driven partnerships could help NRZ expand capacity without placing the entire funding burden on its balance sheet.
“I would also like to commend the board and management for the Zimasco Public-Private Partnership, which was commissioned two weeks ago.
“This demonstrates the kind of innovative and commercially driven thinking that NRZ requires.
“It shows that management is actively exploring ways to increase capacity without placing the entire funding requirements on the balance sheet.
“This approach should be pursued further with other major customers and strategic partners where there is a strong commercial case.”
However, she said PPPs would not be sufficient to meet NRZ’s broader capital requirements.
“At the same time, the scale of NRZ requirements means that broader recapitalisation remains necessary.”
The shareholder’s focus, she said, was therefore on ensuring that any capital raised translated into measurable improvements in the railway’s operations and financial position.
“Our objective is not to simply introduce capital, but to ensure that this capital translates to improved reliability, increased tonnage, stronger revenues, and ultimately a financially sustainable railway.”
Ms Mudzingwa said the restructuring and modernisation of NRZ must continue if the railway company is to fulfil its role in Zimbabwe’s economy and the regional logistics network.
“We need a railway company that is commercially focused, operationally efficient, and capable of attracting both public and private capital.”
“NRZ has an important role to play in Zimbabwe’s economy and in the regional logistics network.
“Its vision remains to become a dominant feature of transport logistics solutions provider.
“Achieving that vision will require disciplined execution from the board and management, supported by the shareholder and our strategic partners,” she said.
Ms Mudzingwa said as Mutapa Investment Fund, they remain committed to supporting the turnaround of NRZ and restoring the railways to the position it should occupy as a critical backbone of Zimbabwe’s transport and logistics system.
Meanwhile, NRZ is also working to clear its backlog of statutory meetings, with the parastatal dealing with AGMs covering the 2022 and 2023 financial years.
In an interview with Zimpapers Business Hub, NRZ Deputy Board Chairperson Mrs Molly Dingani said the board and management were working to bring the railway up to date.
“What we have been having as NRZ is annual general meetings. We were covering the years 2022 and 2023 as we are running behind,” she said.
“So our plan is to make sure that we have the 2024 and 2025 annual general meetings before the end of the year.
“So the board and management are going to work hard to make sure that we are compliant and that the shareholders’ wishes are fulfilled.”
Mrs Dingani said shareholders were also pushing for the acquisition of new equipment and rolling stock to restore NRZ’s ability to fulfil its mandate.
“We have representatives from the shareholders, they gave us a good statement, making sure that NRZ has been assisted in terms of getting new equipment, rolling stock, locomotives, and then to make sure that NRZ is fully operational and be able to fulfil its mandate.”
The combination of governance reforms, recapitalisation, infrastructure rehabilitation and commercially driven partnerships is expected to underpin NRZ’s broader revival, with the railway company seeking to
move from its low-volume base towards becoming a major freight and regional logistics artery once again.
