NRZ resuscitation key to Byo revival

By Nqobani Ndlovu

THE resuscitation of the National Railways of Zimbabwe (NRZ) is central to the revival of Bulawayo, which located at the heart of the region’s railway network.

Established in 1897, the NRZ is headquartered in Bulawayo. It was part of imperialist idealist and mogul Cecil John Rhodes’ “Cape-to-Cairo” road and rail network project.

Bulawayo, also known as the City of Kings due to its association with its famous founder Ndebele Kings Mzilikazi Khumalo and his son Lobengula, was a strategic place for Rhodes’ dream as the city links Zimbabwe with Zambia, South Africa, Botswana and Mozambique ports of Beira and Maputo, through the railway network as well as countries further north.

Bulawayo is probably the only city in the world whose suburbs, townships and roads are significantly named after one family – that of Mzilikazi. There are names like Khumalo, Famona, Njube, Nguboyenja, Nkulumane, Lobengula and of course Mzilikazi for roads, suburbs, townships and schools. There is also Mashobana township named after Mzilikazi’s father. Even some bars and tarvens (for instance Mzilikazi Gardens) had their names.

Zimbabwe’s railway system has three well-connected hubs; Bulawayo, Gweru, and Harare. The railway is at the centre of the international rail routes linking the Democratic Republic of Congo, Zambia, Botswana, Mozambique and its ports of Beira and Maputo, and South Africa’s critical ports of Durban, Richards Bay and Port Elizabeth.
It is also at the centre of shorter and cost-effective railroad links between Malawi and South Africa, the port of Beira through Harare, and Lusaka and Durban.

The line from Zambia through Victoria Falls; the line from Botswana through Plumtree; the line from South Africa through Beitbridge; and the line to the central parts of Zimbabwe through Gweru all converge in Bulawayo.

Former Confederation of Zimbabwe Industries president Busisa Moyo said the NRZ resuscitation project as critical for Bulawayo industries. He said Bulawayo now has a chance to retool and gear for economic recovery.

“NRZ is key to Bulawayo industries easily accessing markets in Harare, Gaborone and Lusaka; in the whole region, as well as raw materials also reaching them at competitive costs. Regional and global value chains can now be easily integrated through Bulawayo,” Moyo said.

“It will actually be a catalyst for Bulawayo revival. Companies did not retool as they had no efficient access to markets and landing costs of raw materials were too high. Low logistics costs now make it justifiable to retool if NRZ lowers the cost of transport in and out of Bulawayo by 50% which is our expectation as industry.”

Analysts say although the revival of Bulawayo industries may not be immediate following the commissioning of the new NRZ equipment as part of its turnaround programme, the resuscitation of the rail network is key to local and regional trade, besides Bulawayo’s renewal.

President Emmerson Mnangagwa on Wednesday commissioned NRZ equipment under the rail parastatals’ US$400 million recapitalisation project.

The NRZ received equipment which comprises 150 wagons, seven locomotives and seven passenger coaches leased from the South African rail entity, Transnet, as an interim measure while negotiations for the recapitalisation programme are being finalised and new equipment is being manufactured.

NRZ is finalising a $400 million recapitalisation deal with the Diaspora Infrastructure Development Group (DIDG) and Transnet Consortium. NRZ general manager Lewis Mukwada said financial closure on the deal is expected by June 2018.
Mnangagwa said this was part of a cocktail of measures government was implementing revive Bulawayo industries and the economy as a whole.

“This investment will not only revive the railway network, but will also benefit downstream backward and forward linkage-industries related to railway operations,” Mnangagwa said.
DIDG chairman Donovan Chimhandamba, who is based in Johannesburg, South Africa, said his company was ready to deliver on the project.

“The delivery of the first batch of rolling is part of part of an interim solution, an interim solution designed to provide immediate rolling stock capacity to NRZ while we start bedding down all other processes and approvals required to implement such a transaction in accordance with local and international laws,” he said.

“It is important to note that new locomotives can take anything between 18 and 24 months from ordering to delivery. So the interim solution we are putting in place is a pragmatic approach in boosting NRZ’s immediate capacity as opposed to idling with current capacity for 18 months. This interim solution rolling stock we brought will continue to be here until such a time the new permanent stick is manufactured and replaces it. This pragmatic approach will allow NRZ to immediately service the increasing demand to move coal and chrome from the likes of Hwange and Zimasco while rolling stock is being manufactured.

“While the US$400 million rehabilitation programme is aimed at raising NRZ capacity from three million tonnes to 10 million tonnes per year by fixing perway, signalling and providing rolling stock, our intention is to ensure manufacturing industries that support NRZ recapitalisation programme are rcapacitated.”

Chimhandamba said their technical partner, Transnet, during the last financial year moved 220 million tonnes, while NRZ carried 2,7 million tonnes per year. He said Transnet generated US$5 billion in revenue, had a S$2 billion earnings before interest, tax, depreciation and amortisation (EBDTA), a measure of a company’s operating performance, and net profit of US$215 million under tough operating environment. In that period, it recapitalised its network by about US$1,6 billion and retained cash and equivalents of US$1,2 billion.

Analysts, however, say NRZ resuscitation can only help industry if transportation costs significantly go down.
“Bulawayo industries can only partly benefit if one cost drivers, which is transportation, is significantly reduced,” said Butler Tambo, a Bulawayo-based policy analyst.

“It’s a package of factors that will make costs of production lower. Besides transportation costs, delays at borders for entry of raw materials, high costs of electricity, water and labour in Zimbabwe relative to the region and high costs of short-term borrowing also have to be fixed for industry to benefit.” Zimbabwe ranks lowly when it comes to the ease of doing business and competiveness. These are some of the issues which must also be addressed, he said.

“While all businesses are subject to logistical costs, the incremental costs Zimbabwean firms pay relative to their neighbours, particularly on imports, represent a very significant competitive disadvantage,” Tambo said.

Reginald Shoko, an analyst, said Bulawayo also need innovation to move forward.

“We must face the reality that some of the Bulawayo industries have been overtaken by technological advances and will not be revived in their old state,” Shoko said.

“The retooling of industries must be focussed on those that are still relevant and have a comparative advantage in their production matrix in order to compete in the global economy.

“In some cases, we must consider importing semi-finished products and finishing the manufacturing here as way of revitalising the industry as is the case in most economies instead of trying to produce the whole product local. An efficient NRZ will benefit Bulawayo industrial revival.”

Mnangagwa said Bulawayo was centrally located to drive regional rail transportation, with ripple effects on local industries and those across the country. He said apart from ensuring modernisation, rehabilitation and refurbishment of rail infrastructure, government will establish new networks to penetrate the region.

“This will in turn hasten regional integration and enhance our ability to offer lower transport costs, based on economies of scale and reduced cost of doing business. A rejuvenated railway network will therefore, not only benefit the country but other countries in the sub-region,” he said.

The commissioning the NRZ equipment by Mnangagwa comes a month before government gazettes the NRZ Debt Assumption Bill that was sent to the Ministry of Finance and Economic Development last month.

This will facilitate takeover of NRZ’s US$348 million debt that analysts say is major turnoff for investors. Government has prioritised resuscitation of rail infrastructure as one of the pillars of economic recovery.

“The revival of NRZ will reduce the costs of transporting goods and also lower the cost of doing business, as well as drive the Bulawayo revival agenda and broad economic recovery,” Tambo said.

NRZ Time Line

  • 1897 – First train arrives in Bulawayo;
  •  Line construction begun in 1892 from Fontesvilla (Mozambique) to Umtali (Mutate) and from Vryburg (South Africa) to Bulawayo in 1892;
  •  The link between Harare and Bulawayo takes place in October 1902;
  • Construction northward begins from Bulawayo in 1903 and reaches Zambia and DRC in 1909;
  •  Up to 1927 the whole system was operated by the Mashonaland Railways company under the title Beira and Mashonaland and Rhodes railways;
  •  In October 1927 the Rhodesia railways company becomes the working company;
  • Rhodesia Railways assumes ownership of the whole railways company in 1936;
  • The Vryburg to Rabathlabama section was later acquired by the South African railways in December 1959;
  •  In April 1947 Rhodesian government acquires the asset of the Rhodesia Railways Ltd and the railway undertaking becomes a statutory body of the Rhodesia railways in November 1949;
  • In July 1967 the rail network splits with Zambia railways taking over the northern railway system and Rhodesia Railways the southern one;
  • In 1979 the title Rhodesia Railways changes to Zimbabwe Rhodesia Railways and finally to National Railways of Zimbabwe in May 1980 after the nation attained its independence;
  •  In 1983, the electrification of the busy mainline (a distance of 315 km between Harare and Dabuka marshalling yard near Gweru in midlands took place;
  • The inaugural train runs on October 22 1983;
  •  In 1987 — NRZ relinquishes ownership of Botswana section of the railway line giving rise to the formation of a separate entity to cope with increased traffic volumes;
  •  1992 — arrival of diesel electric 11 class of locomotives;
  • Stem locomotives subsequently withdrawn from mainline operations in 1993, but a small number was retained for safari use;
  • 1996 — construction of a new link between West Nicholson providing a more direct link between Beitbridge, south Africa and Bulawayo;
  •  1997 – deregulation of the transport industry allowes NRZ to operate as a commercial entity was enacted.
  • A new fleet passenger coaches were acquired in 1998;
  • In 2001 — NRZ introduces a commuter train service in Harare and Bulawayo to cushion urban commuters from rising costs; and
  • The Bulawayo – Francis town passenger train service was re – introduced in May 2006; and
  •  2018 ‑ NRZ launches US$400 million recapitalisation project in Bulawayo.