Joina Centre costs surge to $200b

Chris Goko/Roadwin Chirara

THE long-delayed Joina Centre, whose concept is owned by shrewd entrepreneur Shingai Mutasa, could cost nearly $200 billion on completion, as businessdigest learnt this week that t

he promoters have been vainly seeking national project status (NPS)-linked construction incentives to help contain costs and expedite completion.


An analysis of the foreign exchange-linked costing of the A-class central Harare building — at US$32 million or $700 million equivalent at inception six years ago — and the subsequent 257% implosion of the Zimbabwe dollar trading rate to the American unit shows that the initial budget has markedly risen.


Much as a Joina Development Company (JDC) spokesman could not dwell on the completion-value and cost-split aspects — referring to local and foreign capital needs of the commercial property, he stressed that investors were committed to fulfilling the project and consequently adopted a two-pronged strategy to polish up Joina next year.


JDC is the vehicle through which Mutasa and fellow investors are erecting the huge Harare skyscraper.


Acknowledging the operational problems dogging the project since 1998 and institutional investors’ interest, the spokesman said they had “constantly been engaging” at least four key government departments — officially and otherwise — to elicit NPS classification of the building on mainly issues relating to foreign-investor participation, importation of materials and other waivers.


JDC considers the project to be a national asset and priority in light of financial backing from the Communications and Allied Industry Pension Fund, Local Authorities Pension Fund, National Railways Contributory Pension Fund and $1 billion mortgage provisions by the National Social Security Authority.


The pension funds, grouped under Cherryfield Investments, form part of a Zimbabwean variable rate loan stock company owning a minority 42% of the Joina project.


Said the spokesman: “We have had some challenges here and there, some of them have contributed to us engaging the government to consider the significance of the structure and those that are stakeholders in the project.”

The much sought-after NPS impetus, also applying to large infrastructure projects such as dams, would enable JDC to enjoy duty exemptions and other taxes like value added tax, and $100 million-plus council rates which it is currently paying.


While they were working at sprucing up the lower section of the building, essentially the podium and retail section, then the corporate block, JDC would seek before January, investor approval and consent on “slight changes” or finishes.


The cost-induced cosmetic changes relate to less aluminium use or columning and more pronounced use of already-secured cladding blocks whose quantity is being boosted at a roasting plant in the country’s second largest city of Bulawayo.


Joina, with an initial two-year completion target, is way behind schedule and investors — including a Saudi Arabian prince’s Mauritian subsidiary, Kingdom Joina Holdings (KJH) — are now racing for the new 2005 deadline.


Although they had won Reserve Bank approval to procure the favoured and lighter aluminium materials from abroad, it made little sense when they could be substituted for local building components, the spokesman said.

“We are working on a pre-letting concept and we are having to build to… tenants’ specifications, and really changes are bound to take place,” he said.


To this end, JDC’s main South African architects Stausch Vorster have come up with the final outlook print, marking one of the many changes also affecting the main structure.


Meanwhile, the company says Joina’s ownership structure has not changed despite persistent rumour that Mutasa’s direct interest in the project — named after his late mother — had diminished to about 5% because foreign funders were squeezing local investors owing to continued outlays.


While Mutasa majority owns FMI Holdings, partnering KJH in the main Dubury Investments consortium, the Joina deal structure allowed “a flexible handling mechanism” whereby local shareholders would retain their lead position even though foreign funders had poured in money almost eclipsing Zimbabwean capital obligations.


“Like all businesses, changes occur, but the (share) structure has returned to the initial arrangement, with Dubury having the controlling stake,” said the spokeman, adding the US$2 million injections were phased capital subscriptions by foriegn funders and this was a long-agreed issue.


Dubury, co-owned by Mutasa and the Saudi prince — touted world’s fifth richest man — hasan assailable 57,69% holding in Joina.