Mixed feelings over Zisco $500m debt takeover

THERE were mixed feelings from Harare residents over the government assumption of the Ziscosteel $500 million debt, with some suggesting that an audit of the comatose steel company’s indebtedness must first be done before assumption of the debt, while others suggested that the Bill must be passed with haste to rescue the company.

BY VENERANDA LANGA

The issues came out during public hearings on the Zisco Debt Assumption Bill 2018 in the National Assembly, where most people said they were worried about the trends, where parastatals were burdening taxpayers by asking the government to assume their debts accumulated through maladministration.

Chairperson of the Budget and Finance Parliamentary Portfolio Committee, David Chapfika, said the Bill seeks to facilitate the resuscitation of Zisco following its closure in 2008, and after it accumulated a $494 817 324 debt.

Darlington Madzonga from the Zimbabwe Coalition on Debt and Development accused government of overburdening overtaxed Zimbabweans with taking over debts which people do not know how they were accumulated.

“If we scrutinise the Zisco debt, we find that it owes money to the Zimbabwe Revenue Authority (Zimra), pay as you earn, and insurance companies, which means that they would deduct money from the employees, but failed to remit it, yet now they are asking Zimbabweans to take over that debt,” he said.

“The total amount of this debt is exaggerated and an audit of the Zisco debt must be done because some of the reasons of these debts are due to poor corporate governance and corruption, and it is unfair for Zimbabweans to pay taxes for illegitimate and odious debts,” he said.

But Crispen Mukwindi said the Bill must be passed without delay in the interest of Zisco’s creditors, who supplied goods and services but have not been paid what they were owed.

Tarisai Jingo, who represented a funeral insurance company said Zisco would deduct funeral subscriptions from workers, but failed to remit the money resulting in huge debts to funeral companies. But, he said the Bill failed to list Zisco’s creditors like funeral assurance companies. Different people who spoke during the hearings seemed unhappy about government adding onto its indebtedness by taking over the debt. Zisco owes $94 865 957 in payroll liabilities, and $39 145 930 staff pensions. Kwekwe City Council is owed $16 470 627, and Redcliff Municipality $11 099 138, while Zimra is owed $15 279 215 in unremitted taxes.

A glimpse of the debts appears to indicate that they were accumulated when Zisco was not productive during the 2008 to 2016 period.

1 Comment

  1. Muchero WaNegondo

    I like the fact that the assumption of the ZISCO debt has been brought before parliament for scrutny before being implemented. This is a departure from the past, where debts nocidimously found thzeir way to the national balance sheet. The idea of an audit is, however, very noble. Who is owed by ZISCO? Did they even supply the goods and services that they are claiming payment for? We don’t want to be shocked that one of the debtsd is for the ‘resurrection of bast furnace’ that never took place in the first place. The audit must also give us some lessons learnt on how not to run a parastatal so that the same embarassment will ne ver repeat ityself again. The process involves a huge sum of money and should never be rushed.

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