Govt to bend indigenisation policy on Airzim — Mpofu

HARARE - Zimbabwe is willing to compromise on indigenisation stipulations to help the national airline to secure a new investor.

Transport minister Obert Mpofu said government was pursuing various efforts to ensure that Air Zimbabwe (Airzim) starts operating on a sustainable basis.

“We would be looking at several possibilities out of which a compromise where, indigenisation is concerned, one route of compromise would be selected and this would be an outcome of negotiations between the two parties. We are willing and are in the process of making sure that Airzim secures an investor,” he said.

This comes as the country’s indigenisation policy, which compels foreigners to cede 51 percent shareholding to locals, has been singled out as a factor in repelling investment in the aviation sector as well as in other sectors of the economy.

Mpofu told delegates attending the commissioning of Airzim’s medium range Airbus A320 on Wednesday that government was assuming the struggling national airline’s debt to make the carrier attractive to investment.

The State-owned airline — with $298 million debt overhang — requires close to $260 million in new capital to revive its operations.

Cabinet recently gave the airline an ultimatum to find a technical partner to revamp it, and help turn its fortunes.

Meanwhile, the A320 that was being commissioned is one of the two aircrafts which Airzim is leasing from Sonangol, an Angolan parastatal.

The hard-pressed national carrier is also broadening its revenue streams through the commercialisation of its technical and engineering services.

The airline is targeting the transport, mining, manufacturing, construction and printing industries, among others.

The services offered include non-destructive testing, electroplating, metrology, welding, precision machining and heat treatment.

According to Airzim acting chief executive, Edmund Makona, the airline also has plans to introduce flights to the United Kingdom and China but the company is being dragged by legacy issues.

The parastatal has for long been dogged by viability challenges and without any financial support from government — the sole shareholder in Airzim — the airline is currently surviving from hand to mouth.

It incurred a $45 million loss in 2010 before narrowing the losses to $28 million in 2011 and $26 million in 2012. The losses, however, widened to $39,4 million in 2013.

Comments (13)

I do not think selective application of the indigenisation policy would work for Air Zimbabwe or for any other company or entity for that matter. Where is Zimbabwe Glass Industries (Zimglass) today? There is no investor who would willing to invest into a company where he would have no say as to how his investment would be managed. Period! If the powers-that-be continue to fidget while `Rome is burning` it is their demise. A user-friendly policy is required as a matter of urgency so Zimbabwe can take its rightful place as a jewel of Southern Africa if not of Africa.

Mutongi Gava - 11 May 2015

You can compromise on policy to suit air Zimbabwe but any invester will assess the market and how viable it will be to invest in Zimbabwe. The first question is where will be the market for that? It cant be in Zimbabwe because demand for that service isn't there as companies are closing. If they were growing then we business travellers could be travelling in and out of Zimbabwe on business.

Ziziharinanyanga - 11 May 2015

Zim is now in ruins.

Big Meech Larry Hoover - 11 May 2015

Go for it Cde Minister. Then when the airline is making money, boot them out anyway. Just leave the suckers 49%

Joyrose Anylove Bezuidenhout - 11 May 2015

If Honorable Minister Mpofu can find a compromise with the Zimbabwe Indegenisation laws to attract investors at AIR ZIM, WHAT STOPS HIS COUNTERPART in doing the same ' AT THE TELECEL SAGA,',,,,,DOUBLE STANDARDS.

Chawaz - 13 May 2015

bending the indegenisation laws then when the airline is making money they will cause trouble for the investor typical of this people from bambazonke province in a nutshell they will reap what the investor has sowed

Zimbabwe is Mine - 14 May 2015

no one will invest in air zim as long as that mpofu the crook is there

GARIKAI MUSONA - 14 May 2015

In the airline business there isn`t much you can do to twist things in your way for your own corrupt way opf doing things Mr Mpofu. This is pretty one industry regulated not by your government but by outside forces which have to genuinely answer to public demands. You have no chance at all to do it as you please - the way you guys do it now in Zimbabwe. Besides do not forget there exist foreign forces keen to see Air Zim dead for good so that they can takeover the lucrutive business slot that is wasted by the airline.

Chorosi - 14 May 2015

It's so infuriating how the government of Zimbabwe (GOZ) completely fails to see the direct link between policy inconsistency and investor confidence. The indigenisation policy is a noble endeavour which needs to be clarified and put to bed. In particular the 51% local shareholding will just not fly; employee share schemes and community share schemes are just the way to go. Both empower the employees and the community in which the investment is operating in. Community share schemes are crucial in natural resource based businesses (mining, agriculture and tourism). This flip flopping (donga watonga yakarehwa naMukoma Zivai) will not engender investor confidence far from it! Investors will not come! An investor wants to be assured that their investment will be safe from expropriation i.e Will the powers that be respect my property ownership rights? The Telecel saga does not help either, any serious investor will put themselves in Telecel's shoes and the feeling is just scary. Yes there are investment opportunities in Zimbabwe with fantastic returns but our country risk is just too high. The minister thinks he is assuring potential investors in Air Zimbabwe by waiving the 51% local ownership requirement of the country's indigenisation laws. But in actual fact he is just showing how variable government policy is! Investors require consistent policies because they plan for more than 5 years, what's to stop the minister from changing his mind once the investor is in? the government must learn to speak with one voice…

Gatsi Rusere - 14 May 2015

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