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The Deputy Minister of Industry and Commerce Chiratidzo Mabuwa (centre) is shown some iron nails made by Shepco BMA Fasteners by its Production Manager Mr Alois Mupariwa (left) while the group CEO Mr Shepherd Chawira looks on during the deputy minister’s tour of the company at Donnington industrial area last week

Oliver Kazunga, Senior Business Reporter
A LOCAL mining and industrial equipment manufacturer, Shepco Group, needs about $2 million for retooling so as to expand its operations.

The engineering firm operates two divisions — Shepco Industrial Supplies and Shepco BMA Fasteners, a bolt manufacturing section that was bought on liquidation in December 2015 from Steelnet.Shepco Industrial Supplies manufactures mining equipment such as locomotives and underground loaders, among others.

In an interview during a tour of the company by Industry and Commerce Deputy Minister Chiratidzo Mabuwa last week, Shepco Group chief executive officer, Mr Shepherd Chawira, said the closure of Zisco has worsened their plight.

“If given a lot of support, we want to expand our production and the support that we have discussed with the Deputy Minister is the need for cheaper finance, which would be a bit long-term. When its long-term finance, it enables us to invest in plant and equipment to enable us to expand our production. We need about $1 million only for Shepco Industrial Supplies and Shepco BMA, we are looking at another $1 million,” he said.

Zisco Steel, Zimbabwe’s largest steel manufacturing concern ceased operations in 2008 after facing some financial challenges. In 2011, the Government signed a $750 million revival deal with an Indian conglomerate, Essar Global. However, the deal has since collapsed and the Government is seeking a new strategic partner.

Shepco Industrial Supplies is operating at 60 percent capacity utilisation while Shepco BMA is operating at about 10 percent capacity utilisation.

The industrial supplies division employs a total of 90 people in Harare and Bulawayo while Shepco BMA, which resumed operations in January this year with seven workers, presently employs 40 people.Following the buying of BMA Fasteners from Steelnet, Mr Chawira said they spent the whole of last year refurbishing equipment at the bolt manufacturing division.

“We have spoken to the Deputy Minister during a briefing that we are asking for protection from cheap foreign imports that we are finding difficult to compete with. We are asking for a Statutory Instrument similar to SI 64 of 2016 so that we can expand operations and increase our employment figures to 200 in one year,” he said.

Mr Chawira said if his organisation gets the required funding it has the potential to improve capacity utilisation to about 90 percent and 95 percent.

He said they had in the past secured funding locally but the funding was short-term in nature and with interest rates on the high side. Mr Chawira said securing short term finance for the recapitalisation of industry was not sustainable for the revival of the manufacturing sector.

“The current lending rates are pegged at about 12 percent because the Reserve Bank of Zimbabwe put a cap at 12 percent but productive lending for recapitalisation one would look at rates in the region of five percent. After touring Shepco BMA, Mr Chawira told Deputy Minister Mabuwa that the demise of Zisco Steel had also impacted on their company’s operational performance.

“The other challenge we are facing is the non-functionality of Zisco, our major raw material at BMA is mainly steel and if operating at full capacity will use between 400 and 450 tonnes of raw steel products per month. So we want Zisco Steel back on board.

“Currently with a 10 percent capacity utilisation, we are using 40 tonnes of raw steel products per month, which at the moment we are importing but because of quality concerns we have started buying from local suppliers. As industry we implore the Government to lower down the cost of electricity for industry to promote competitiveness in the manufacturing sector. If we can get power at a reasonable tariff, that will also reduce the cost of production by the local industry. As we speak Zambia is getting power to the industry, I think roughly at about 6 or 7 cents per Kilowatt hour and we are at 10 cents/KWh. It means if we are to export our products to Zambia, we are already starting on a bad position,” he said.

In an interview after the tour, Deputy Minister Mabuwa said the Government has already started identifying and supporting industries with a potential to drive the economy.

“We are identifying industries especially those that have got the potential to drive the economy. The Reserve Bank of Zimbabwe is prioritising those industries by at least allocating them the scarce resources that we have in order for us to earn the foreign currency,” she said.

Deputy Minister Mabuwa said the Government was encouraging manufacturers to export through the five percent export incentive scheme as part of efforts to grow the economy by generating foreign currency.Last year, RBZ introduced a five percent export incentive scheme to boost the country’s export earnings under the bond notes facility.

@okazunga