Harare - Loss maker ZECO, has announced that it is changing its strategic focus from a Rolling Stock company to a Residential and Commercial Property Investment and Development company, in a bid to unlock shareholder value.

The Rolling Stock business involved the assembly and refurbishment of locomotives, the manufacture and refurbishment of railway wagons, granby cars, coco pans and skips for the mining sector. The fortunes of the business were closely linked to that of defunct state related businesses, National Railways of Zimbabwe (NRZ) and the ZISCO Steel.

NRZ operates a dilapidated rail network system which has an installed capacity to move 18 million tonnes of cargo per annum but only moved 2 million tonnes in 2021. The underwhelming volumes is as a result of certain parts of the rail system being unusable, reduced and dilapidated wagons and locomotive fleet and cashflow management at the state entity.

Most of the 2,000 wagons under NRZ’s management are from the colonial era and no longer in use, some of which were supplied by ZECO. ZECO said it had supplied about 6,500 to NRZ and some African countries over its 6 decades of existence.

ZECO was listed on the ZSE at the height of hyperinflation in 2007 but has a history stretching as far back as 1948. It is at independence in 1980 that the ZECO name was introduced from RESCO.

As part of its value proposition to investors at the point of listing in 2007, ZECO highlighted its existing business with NRZ, stretching five decades, as pivotal for its growth. It specifically aimed to get contracts for refurbishment and replacement of the wagons. Between then and now, NRZ’s fortunes have worsened and its reformation has stalled.

ZECO also used to trade with ZISCOSTEEL, once Africa’s largest iron and steel making company. ZISCOSTEEL was established in 1942 and folded in 2008, just a year after ZECO’s listing, scuttling the latter’s projection.

ZECO’s Chiyangwa made overtures in 2015 to partner the potential winner among investors vying for the ZISCOSTEEL as a local shareholding in fulfillment of the then empowerment law, that is after the company’s assets had been put on the market.

From that respective year onwards (2015), ZECO’s financial fortunes began waning, justifying Chiyangwa’s interest in a company which was in its value chain. From 2016 onwards, the company’s revenue and profitability began to fall resulting in massive losses.

In a circular to shareholders, the company said the uncertainties surrounding the railway transportation industry over the years and the closure of many mines and the informalization of the mining sector have put pressure to the Company’s prospects as a Rolling Stock company.

ZECO has found a suitor for its rolling stock business at a realised value of US$4.5 million. Consequently, the business will be able to refocus and channel part of the resources on the purchase of residential piece of land measuring 365,395 square metres in Harare.

The company hopes that the new strategic thrust will enable it to participate in the growth prospects of the property sector. Chiyangwa is not new to the property sector and holds vast tracts of land and developments across Zimbabwe, some of which is allegedly controversially acquired.

Equity Axis News