One-on-one with new NRZ general manager
ENGINEER Lewis Mukwada was appointed National Railways of Zimbabwe substantive general manager last month. He had been the acting GM since the death of Retired Air Commodore Mike Karakadzai in August 2013.
Sunday News Business Senior Reporter Roberta Katunga (RK) caught up with Lewis Mukwada (LM) to talk about his appointment and vision for the struggling parastatal.
RK: Firstly, Eng Mukwada, congratulations on your appointment. As the general manager, what is your vision for the parastatal and how do you intend to achieve it?
LM: Thank you. The National Railways of Zimbabwe plays a significant role in the economy. When an organisation as big as NRZ faces problems, this also impacts the economy negatively in terms of revenue among other issues. My vision is to restore NRZ to the vibrant company it was so that it continues to play an integral role in the revival of Bulawayo and economic development. More integration is needed among regional railways and NRZ is geographically, strategically positioned in the region with links to various countries. We are working closely with Mozambique railways, South African railways as well as Zambian railways because it has been noted that instead of looking for business as individuals, working as a team to court customers is more effective.
Our workshops have the capacity to repair locomotives and wagons. In order to restore NRZ to the vibrant company it was, we have also taken jobs from Botswana and Mozambique, repairing their equipment. I want to see NRZ being a major player in rehabilitating equipment. Following the liberalisation of the transport sector, a lot of traffic has been taken by road. My strategy is to restore the company’s position as a major transporter of cargo and freight, thus taking back our business portfolios. In order to provide a superior service provision to our customers, it is important for us to focus on recaptalisation of the company to effectively compete with road transport hence re-equipping NRZ is a major area of focus.
RK: NRZ has been facing a lot of problems as you have mentioned, obsolete equipment, outdated infrastructure and failure to remunerate workers. What strategies will you put in place to achieve turnaround of the parastatal in the face of these challenges?
LM: To understand where the company is now and the challenges, it’s important to understand the history. From around 2000, business has been coming down from 12 million tonnes then to around 2,6 million tonnes in 2009. This has been as a result of lack of recapitalisation and business shrinking together with the economy. In 2009, we started to recover and repair some of our equipment through funds from the Public Sector Investment programme as well as internally generated money. These strategies saw our volumes increasing in 2014 to about 3,8 million tonnes.
However, as the situation took a turn, we were faced with failure to pay salaries thus being forced to stagger the payments. Last year, we experienced more problems and lost business in chrome ore when commodity prices fell and there was also a reduction in coal volumes. Business shrunk further and revenue subsequently declined. The salaries payment became more erratic.
To achieve turnaround in the face of these challenges, we have come up with initiatives with Mozambique on imports and exports. We have also engaged SA and Zambia railways. We are also offering locally special packages for service delivery in return for guaranteed volumes in traffic. By increasing business, we increase revenue and are at a better position to retool and pay our workers. However, the strike by workers started at a time when we started getting business. This has resulted in major loss of confidence among our customers. The main strategy is to restore confidence and get business to generate sufficient cash flow and stabilise while pursuing recapitalisation.
RK: NRZ has been struggling to attract investment, what strategies are in place to lure investors?
LM: For any investor to invest in a company, the project must be bankable. Investors want assurance on Return on Investment (ROI). We are working on producing a bankable case for the investors. In April, we floated a tender for a transaction advisor and the process is near completion, we will be appointing them anytime now.
By engaging a transaction advisor, we will be able to drive the initiative and produce a bankable document attractive to the investors and be able to accelerate the process of recapitalisation. Previously we were relying on investors giving us proposals but the best way is to accelerate the process by going to the investors. We are not going to disregard efforts that have been made as there are talks with potential partners but we also want to spearhead seeking investment as a company.
RK: There are reports that NRZ has plans to retrench about 70 percent of its workforce. How will this exercise be carried out?
LM: We are trying to come up with an ideal staff level for each department. In 2014, we engaged an international consultancy firm to do a study on staff levels. Their findings were that with the size of infrastructure we have, the only way to reduce our workforce is through automation. Re-engineering processes is one way of carrying out this initiative as work that is currently being done manually will be done automated. We recently introduced a SAP business management system which will be done from invoicing to human resource management and procurement.
We are in the process of seeking funds to complete all the modules. That way a lot of work done manually will be automated and further reduction in staff will be realised. The numbers of workers will be determined by the new processes that we would have come up with. The purpose of this exercise is to improve capacity and recover business volumes to earn more money on freight business. RK: How many workers does NRZ have? LM: In the 1980s, NRZ employed approximately 18 000 people. The numbers have declined over the years due to a number of reasons. In the 90s staff complement was 12 000 while in the turn of the millennium and beyond, we froze recruitment and people left for various reasons leaving 6 500 by 2015. From last year to now, we lost an additional 1 000 workers thus we have 5 500 workers.
RK: The problems at NRZ have been persisting for a while. Will the situation improve?
LM: I believe this is a phase that we are going through. With the right initiatives, the company can be turned around and better days are coming. RK: Thanks you for your time. LM: Thank you.