SERIOUS cash-flow problems continue to haunt the state-owned Zimbabwe Iron and Steel Company (Zisco) with revelations this week that the company failed to pay its August salaries.
The company, which has been saddled with debts, delayed the payment of last month’s salaries due to the financial crisis.
Zisco this week confirmed the company was facing serious challenges, but blamed its problems on the influx of cheap steel from South Africa.
Zisco public relations manager Augustine Timbe also confirmed that the company had delayed paying salaries due to cash-flow problems.
“Due to cash-flow problems worsened by effects of dumping of steel originating from South Africa and sold into the Zimbabwean market at prices of about 35% of producing similar steel products in some cases, Zisco experienced delays in payment of workers’ salaries on the due day,” Timbe said this week.
“However, on the fourth day after the due date workers began to access their salaries from their banks.”
Businessdigest, however, understands that the company had to borrow about $30 billion from the Reserve Bank of Zimbabwe’s Productive Sector Facility to plug the holes in its financial books.
There are also reports that all is not well between the company and some of its bankers. Timbe was, however, evasive on whether the steel company was sinking deeper into problems, preferring to comment on the foreign currency issues.
“Zisco needs adequate foreign currency to import ferro alloys, spares and other plant components and requires sufficient working capital and project finance to rehabilitate the works and add value to improve efficiency,” Timbe said.
Zisco has been on a life-support system since Independence with the government on many occasions bailing it out. To date Zisco has carried out about 18 studies to stop its perennial losses without success.