National Railways of Zimbabwe

JULY 2019

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NATIONAL RAILWAYS OF ZIMBABWE BACK ON TRACK INSPIRED BY YOUR SUCCESS

BACK ON TRACK National Railways of Zimbabwe chevron-square-right www.nrz.co.zw phone-square 00263 29 2363521

When Zimbabwe’s economy hit a crisis in the early 2000s, it made effects to the country that are still being reversed today. However, with new government initiatives, investing companies and drive, a revival is occurring and innovation is able to thrive. We spoke with Nyasha Maravanyika, the Public Relations Manager for the National Railways of Zimbabwe (NRZ) about the exciting, wide-scale changes that the country’s railways are finally undertaking, and the huge impact this could have on not only Zimbabwe, but its southern African neighbours as well.

Written by Alice Instone-Brewer

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t the start of the millennium, Zimbabwe’s economy experienced extreme difficulty, and for some industries, this had long-lasting consequences that have only recently begun to change. After the year 2000, the country fell victim to widespread poverty, with a 95% unemployment rate – a situation then compounded by hyperinflation ravaging the economy from 2003 to 2009, which hit a peak of 231 million % hyperinflation in 2008.

This unthinkable situation began, in part, due to the expenses of Zimbabwe’s participation in the 1998-2002 war in the Democratic Republic of Congo, and was re-set in 2009 when the country abandoned its currency. The aftermath of 2009 still had its challenges, but more dramatic turns towards improvement began from 2017, when Emmerson Mnangagwa took over presidency of the country.

“The industry has been slow because of what the country has been through,” Nyasha explained to us. “The National Railways of Zimbabwe’s equipment has been running out on a regular basis, which meant that our capacity was being reduced each year, and we didn’t have the capacity to purchase new equipment because of the fiscal situation of the country.”

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Zimbabwe’s railways were laid down in the 1890s, and many of the tracks have not been updated since. Now, finally, the entire rail system is receiving a major overhaul, including not only the tracks but also the signals system and the locomotives themselves. This is a giant undertaking, and was only recently made possible through the security of an investor: “The changes began to happen in 2014, when the government allowed us to recapitalise the National Railways of Zimbabwe. Previously, they had been looking for part-players to come in to do piece-jobs for the railways, but this time the government has allowed us to go allout to look for investors. However, our balance sheet was not very attractive to investors, so the government allowed us to rope in a financial advisor – Deloitte and Touche.” In 2016, this financial advisor assisted NRZ in putting together a business strategy that it could take to investors to show the railways’ true financial potential and, in 2017, the company held a pre-

bid conference to this effect in Bulawayo. The conference was a great success, attracting 82 potential investors from around the world, including Russia, China, South Africa, the UK, Switzerland and also some local groups. In August 2017, those 82 were whittled down to six candidates, and from there, the then named State Procurement Board (SPB) settled for the Diaspora Infrastructural Development Group (DIDG)/Transnet consortium, which was formed by a group of Zimbabweans abroad who teamed up with South Africa’s Transnet Rail Group to pursue this investment.

Negotiations with DIDG-Transnet consortium are still underway, but the first injection of support has already been delivered.

“At one time, we had over 3,000 wagons, close to 1000 locomotives and over 2000 coaches.

These numbers have now dwindled, and we need to get more equipment.” As a part of their negotiations with their sponsor, NRZ requested and received an initial contribution towards re-boosting these numbers, taking delivery of 200 wagons, 13 locomotives and 34 coaches in February 2018. The first injection of funding that NRZ has asked for is US$400 million, but achieving everything that it wants to do could total up to US$ 1.7-1.9 billion, with work taking as long as 25 years to complete.

As a part of this work, as well as replacing the country’s railway tracks and locomotives, NRZ also wants to restore its communication and signals system, which has been vandalised in many places. This vandalism has also taken its electric rail lines out of commission. “Zimbabwe was among the first countries in Africa to have electrically powered locomotives, and we had an electric track from Gweru up to Harare.

Due to vandalism of the track, where people wanted copper cables and aluminum, among other things, that track is no longer working electrically, so we have reverted to our diesel locomotives.”

Restoring this is a key goal for NRZ. In terms of short-term goals, the company is aiming to increase its business tonnage from the

NATIONAL RAILWAYS OF ZIMBABWE

3.4 million tonnes it achieved in 2018 to 4.2 million tonnes in 2019. “We have also lined up proposed rail routes to connect the region, with Harare-Kafue (Zambia) rail and Harare-Moatize (Mozambique) being the notable routes that are ear-marked for the next five years.”

Zimbabwe’s railway system is beneficial not only for transportation within the country, but also to enable the country to act efficiently as the Southern African hub that it is: for countries such as the Democratic Republic of Congo, Zambia and Malawi, Zimbabwe provides a route to the coastline, and therefore to the ports in Mozambique, South Africa and Namibia. This opens the entire region up for trade, and whilst Zimbabwe currently plays a part in this, an overhauled rail system would greatly improve the role it plays.

Improved transportation should also, NRZ and its investors hope, help to open up tourism areas, which in turn could increase Zimbabwe’s

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real estate potential in these areas. “Zimbabwe is endowed with great tourist resort areas, among them the Victoria Falls – one of the eight wonders of this world. We have a railway line from Victoria Falls up to Mutare, and in Victoria Falls, we have land that is suitable for hotels and shopping malls. We want to lure investors who can develop this land - we are opening it up for business.”

Easy and direct transportation will be a great boon to Zimbabwe’s tourism industry.

However, simple transportation to these locations alone is not enough for NRZ: the company is seeking to truly utilize what it has, and despite its current focus on updating its entire rail system, it has realised that some of its older locomotives do hold value. Namely, its steam trains. “We have found potential in our steam locomotives, which are popular with train enthusiasts, so we started diversifying into the ‘steam train experience’.”

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Nyasha believes that Zimbabwe is one of the few countries left in Africa that still possesses and operates its steam trains, and as the NRZ has discovered, these can have a strong draw factor, especially to foreign holiday makers. “They attract a lot of foreigners from the US, the UK, France, Germany, Japan and other countries: a lot of these foreigners are enthusiastic about the steam trains – they want to board them and spend time in them. Our local people are warming up to it now as well.”

The railway is now putting its steam trains to use with special trips on days such as Mothers’ Day, Fathers’ Day and the Easter Holiday, with journeys departing from Bulawayo and Harare.

The popularity for this venture is starting to take off, and the government’s tourism association is now starting to take interest and support the attraction, such as coordinating steam train rides to mark events such as Bulawayo’s 125year anniversary for the city.

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NRZ currently employs 4,800 members of staff. On the most-part, the company seeks to promote from within, with only a few of the top positions open to recruiting from the outside; to support this, the company also offers extensive training, to the extent that it operates its own training centre. Only a handful of railway companies in Africa can say that they have a centre like this; not only does NRZ train artisans and other necessary skilled staff for its own company, but it also offers wider engineering training to the people of Zimbabwe.

This training centre is of great benefit to both NRZ and the country at large, helping to “unlock the engineering potential” of Zimbabwe, as Nyasha put it. However, this is only one of the ways in which NRZ is going beyond the railway system to help Zimbabwe flourish. During the economic difficulties that beset the country in the early 2000s, many businesses were forced

to close under financial pressure. The cities of Bulawayo, Harare and Gweru saw many of their engineers go out of business, and with this came a slowing and incapacitation of industry.

Thankfully, NRZ saw this need and stepped forward with a solution: “We have massive mechanical engineering workshops which have the potential to develop and establish equipment for the various industries like mining, manufacturing, agriculture and engineering. Our workshops were originally used for the maintenance of our equipment, and the building and developing of our equipment, but since the economic meltdown in the 2000s we decided that we should unlock value in our mechanical workshops, and to do this we created a brand called Inter-Rail-Tech.”

Inter-Rail-Tech applied NRZ’s railway engineers towards the other industries that needed their expertise, and through

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Creating Value

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developing on their skills and expanding their knowledge, they were able to fill this need for all of the industries that had suddenly been left wanting. “Inter-Rail-Tech is there to unlock the potential of our engineering expertise and to do something for the Zimbabwean communities that lost a lot of companies that were doing things in terms of engineering.�

Through Inter-Rail-Tech, NRZ supports many companies through its services, but it has also benefited from many strong partnerships with other companies throughout Zimbabwe. These ties include Pretoria Portland Cement, Lafarge Cement, Makomo Resources, the Zimbabwe Power Company, and steel producers Zimasco, who focus on the production of ferrochrome.

Together, support of the railways should boost and assist Zimbabwe as a whole, through the benefits and ease lent to trade, the boost in tourism, the unlocking of real estate and, on top of that, the additional support that NRZ is

able to give to a wide spectrum of industries.

This ambitious 25-year project will develop in stages, along with the wider developments happening throughout Zimbabwe as it continues to recover and flourish; we look forward to keeping our eye on the industry as it evolves, and watching how far the domino effect of that new strength travels.