The Zimbabwean Government is once again looking for a strategic partner for Air Zimbabwe (UM). In a new proposal, a 74% shareholding in the ailing national carrier is to be put up for grabs after a previous deal with China's Hainan Airlines (HU), in February, broke down over Air Zimbabwe’s reluctance to grant Hainan a 65% stake rather than 45% as proposed.
Additionally, UM's massive debt overhang of USD150million has also proven to be such a discouraging factor so much so that Government now intends to make new amendments to the Zimbabwean Finance Act in which Air Zimbabwe creditors will not be able to lay claim to the airline’s assets until 2015 at least.
“In order to protect the assets of the Air Zimbabwe Corporation or its successor company from attachment by its creditors, it is proposed to extend to it the provisions of the State Liabilities Act (Chapter 22:13).”
In October, Economic Planning and Investment Promotion Minister Tapiwa Mashakada pleaded with foreign investors to take up equity in the Zimbabwean carrier:
“We are desperately looking for strategic partners to take the equity in Air Zimbabwe. As the government, we have said (you can see where our flexibility is) we are prepared to remain with 26% equity and then the strategic partner has the rest,” Minister Mashakada said at a breakfast meeting.
Since resuming operations in early November, Air Zimbabwe has
struggled to attract business, flying empty aircraft on its
Harare-Johannesburg route before drastically cutting fares in the hopes of luring passengers back.
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| Air Zimbabwe crew (Air Zimbabwe) |
A possible suitor lies in the form of Dutch carrier KLM who recently resumed flights to the Zimbabwean capital. KLM stated they would be willing to offer "a strategic partnership in flight operations" though to what extent that 'partnership' will extend, is unsure.
Should a suitable partner be found, there are concerns about how the Air Zimbabwe deal would proceed as current Black Economic Empowerment Laws in the country require any investment over USD500'000 to have at least 51% Indigenous Black Shareholding (see 1Time's joint venture with Nu.Com Zimbabwe, Fresh Air).
There are also qualms about discord in the Zimbabwean Government's
application of various investment laws, and in particular, its inability
to stick to signed contracts, often shifting goal posts on a whim. According to the World Economic Forum’s Global Competitiveness Index
2012-2013 released in June, Zimbabwe is ranked 132nd out of 144 countries worldwide.
A prime example of government discord is a USD750million deal signed last year for the take over of moribund steel maker Ziscosteel by Indian outfit, Essar, in which the Indian company assumed an 80%
shareholding of NewZim Minerals, with the other 20% remaining in the
hands of government. The project has yet to take off.
The delays came as the Zimbabwean government made an
about-turn on the deal and sought to restructure the deal giving it 51% control of the iron ore mining claims in line with the country’s controversial indigenisation policy.
