THE National Railways of Zimbabwe (NRZ) is now expected to move fast to approve the US$400 million recapitalisation proposal tabled by the Diaspora Investment Development Group (DIDG) after the African Export-Import Bank (Afreximbank) was appointed as the mandated lead arranger and coordinating bank for the multi-million dollar project.
TINASHE KAIRIZA/KUDZAI KUWAZA
The choice of Afreximbank as the mandated lead arranger, as reported by the Zimbabwe Independent last week, came as the August 14 deadline, during which period the framework agreement of the deal involving NRZ, DIDG and the South African rail, port and pipeline company, Transnet, should have been closed, expired.
Owing to convoluted and protracted negotiations, the deadline for the framework agreement was extended by six months from February 14 during the Zimbabwe-South Africa Bi-National-Commission meetings in Harare in March, with the endorsement of Foreign Affairs minister Sibusiso Moyo, now driving the project.
Sources close to the deal say, once the NRZ board approves the framework agreement, parties to the multi-million dollar deal, which has generated massive funding interest from a number of South African banks, will proceed to implement the project to rehabilitate Zimbabwe’s dilapidated rail network. Subsequently, Finance minister Mthuli Ncube is also expected to assess the framework agreement, as well as Afreximbank-coordinated funding before recommending cabinet to endorse the deal.
“After the appointment of Afreximbank as the mandated lead arranger, NRZ is now working towards authorising the framework agreement to allow implementation of the deal to commence,” a senior government official said.
“The NRZ board resolution is also subject to an assessment by the Ministry of Finance which will then recommend to cabinet for approval to sign the Joint Venture (JV) agreement.”
The ministries of Transport, Foreign Affairs and International Trade, and Finance are closely involved in the project.
If cabinet gives the greenlight to corporatisation of the JV agreement, parties to the recapitalisation deal will then move in to set up a board as well as making other key managerial and technical appointments whose primary responsibility would be to revive the country’s moribund rail operator.
“Once JV Agreement is signed, a transitional board, chairman, chief executive officer, finance director and human resources director will be appointed to spearhead planning and getting all permits and licenses in place for the joint venture, ” another official told the Independent this week.
Documents show Afreximbank will pump US$100 million into NRZ and co-ordinate funding from a number of regional banks which have already given indicative term sheets. The syndicated funding totals between US$700 million and US$1 billion.
“Following the extension of the framework agreement by the government of Zimbabwe by a further six months from February 14, 2019, we are pleased to confirm that as the DIDG have already raised the required US$400 million funding for the NRZ recapitalisation project, including an additional US$20 million to address start-up and working capital requirements of the Joint Venture Concession Company (JV2)” reads a letter, dated August 6, from DIDG executive chairman Donovan Chimhandamba to NRZ chairperson Martin Dinha.
The letter, obtained from government circles, gave Dinha and his board evidence of funding, paving way for implementation.
Ncube had not responded to questions sent to him at the time of going to print. He had, however, earlier indicated in some interview with an international media organisation that the NZR deal was now moving.
Moyo was also not available for comment, but a senior official in his ministry, Webster Chiyangwa, said they were “pleased” Afreximbank has come on board to finance and syndicate funding for the project.
“We are also pleased to inform you that as DIDG we have appointed Afreximbank as our mandated lead arranger for the NRZ US$400 million recapitalisation project,” Chiyangwa said. “I am not in the office this week, will find out tomorrow (today) and update you.”
Transport and Infrastructural Development Parliamentary Portfolio Committee chairperson Oscar Gorerino, who has in the past raised concern around bottlenecks slowing down implementation of the deal, said Afreximbank was a “serious” partner with capacity to mobilise resources for the multi-million dollar project.
“If they have got a serious partner such as Afreximbank, I want to see progress,” Gorerino told the Independent yesterday. “If they have found Afreximbank as a partner, I do not see any problem, we should now move on with the project.”
Initial financing term sheets seen by the Independent show that Standard Bank was ready to shell out between US$100 million and US$137 million, Absa (US$200 million), Nedbank (US$200 million) and Nedbank Zimbabwe (US$17,5 million) and the Industrial Development Corporation of South Africa (US$100 million).
Ecobank Kenya had also expressed interest to channel US$100 million towards the project, while Trade and Development Bank (TDB), formerly PTA Bank, would provide US$75 million. Latest information shows the term sheets submitted to NRZ by DIDG this week indicate Afreximbank will provide US$100 million; TDB US$75 million; Standard Bank US$317 million (minimum hold US$100 million); Absa US$200 million (minimum US$50 million) and Nedbank US$200 million (minimum US$50 million).
Local financial institutions will also contribute. Some of the institutions which have indicated interest in the project include Old Mutual, Imara Asset Management, ZimRe Holdings, Steward Bank and the National Social Security Authority. CBZ Bank was also initially interested in the project.
The project, at the centre of President Emmerson Mnangagwa’s programme to turn around the country’s comatose economy, has already been unfolding with the provision of an interim rolling stock.