daniel chigunwe
Oliver Kazunga
Senior Business Reporter
THE National Railways of Zimbabwe (NRZ) has cleared its pension arrears, which had ballooned to over $5 billion, marking a crucial milestone as the State-owned entity moves to clear its long-standing legacy debts, including those owed to statutory bodies.
In a statement, the rail operator said the pension arrears amounting to more than $5 billion were accumulated over a long period.
“These arrears, amounting to over $5 billion, were accumulated over the years, mainly due to the meticulous computation of monthly pensions, considering the pensioners’ career details, salary structures, and applicable increments.
“So bad was the NRZ’s state of indebtedness that the Insurance and Pension Commission (IPEC) ranked it as the second worst in terms of pension debt when it released its name-and-shame list in 2022.
“But the new NRZ management has committed itself to ensuring that the debt is cleared,” said the parastatal.
NRZ is led by Respina Zinyanduko, the new general manager appointed to the post in December 2021 at a time when the State rail operator was going through a restructuring exercise designed to address numerous constraints that bedeviled the parastatal.
The restructuring exercise has also seen NRZ aligning its management structure and workforce to the scale of its business operations.
NRZ public affairs and stakeholder relations manager Mr Andrew Kunambura confirmed the development saying it was part of the new management’s thrust of clearing all legacy debts.
“The new management led by general manager Ms Respina Zinyanduko has made it a priority to clear all legacy debts.
“You will understand that on her appointment, she was charged with the responsibility to stabilise the company whose reputation was dented by several legacy issues, among them outstanding employee salaries, ZIMRA PAYE and VAT, ZIMDEF, NSSA, Railmed and Pension Fund debts.
“This is in addition to a long list of foreign debts which threatened the survival of the business.
“As we speak, all these statutory debts have been cleared. The company’s employees are remunerated on time and are not owed a dime anymore and now the pension arrears have been cleared. It’s a sign of good things to come,” he said.
Mr Kunambura said the NRZ general manager demanded maximum effort from the management team with the results now starting to be realised as a debt clearance plan is well on course.
“We are now getting to a point where the NRZ balance sheet gets attractive to potential investors.
“To date, NRZ has managed to clear most local legacy debts like salaries, ZIMRA PAYE, VAT, Railmed and other statutory obligations.”
“Under her leadership, we have also managed to reduce foreign debts like those owed to Hethimex and Portos e Caminhos de Ferro de Moçambique (CFM, Mozambique Ports and Railways),” he said.
In the past, CFM was owed US$6 million and threatened to ban NRZ trains into Mozambique.
However, the CFM debt has been reduced to US$3,2 million.
“That part payment has helped greatly to normalise our relations with CFM and we can now do business together in peace.
“Today we are witnessing yet another key achievement in our debt clearance plan.
“NRZ no longer owes the NRZ Pension fund. The outstanding debt was accruing punitive interest and management took a bold decision to clear the debt for the benefit of both serving and former employees. All these debts were cleared using internally generated funds,” said Mr Kunambura.On the operational side, NRZ committed a certain percentage of its monthly cash flow towards procurement of spares and rehabilitation of infrastructure while waiting for its several recapitalisation initiatives to bear fruit.
Recently, NRZ board chairman Advocate Mike Madiro said his organisation was close to securing a US$115 million loan facility from the African Export-Import Bank (Afreximbank) from which US$81 million would be used to procure rolling stock from RITES Limited of India.
Under the RITES deal, NRZ is expected to receive nine locomotives and 315 wagons and once Afreximbank pays the first instalment to the Indian company, Zimbabwe through its rail operator would take delivery of the first batch of the rolling stock.
Adv Madiro said the balance of US$34 million from the Afreximbank loan would be allocated towards infrastructural rehabilitation and expansion of NRZ’s rail network.
As part of the success stories from the engagement and re-engagement drive being pursued by the Second Republic under the leadership of President Mnangagwa, NRZ has in recent years also been able to sign memoranda of understanding with Turkish and Russian partners, giving the parties impetus to cultivate and maintain cordial relations.
It is hoped that riding on such memoranda of understanding, the rail operator and its Turkish and Russian partners can now move a step further and sign memoranda of agreement paving way to tangible deals similar to the one between NRZ and the Indian firm.
Contacted for comment, Ms Zinyanduko expressed satisfaction with the progress being made at NRZ saying the long-standing debts had been hounding the company for many years.
“The debt was accruing punitive interest and was becoming unbearable for the organisation.
“I would like to appreciate the NRZ staff for their dedication to duty.
“These men and women are always working extra hard to enable us to meet the stretch targets we would have set for ourselves.
“All these debts were settled using internally generated funds. We could not have made it if it were not for these hard working employees,” she said.
The pension debt clearance has also enabled the NRZ pension fund to review upwards pay outs to its pensioners and ensure the rail operator’s retiring employees have a dignified life.
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