Over the years, Zimbabwe has had a somewhat stop-start environment. The business operating conditions are uncertain and lack consistency most times. When policies and conditions change, this may affect the survival of companies. On the other hand, internal problems like maladministration, fraud and incompetency may also lead to company closures. In this article, we look at some of the most memorable companies which are no longer operational now for various reasons.
Shabanie & Mashaba Mines (SMM)
Commissioned in 1979, Shabanie & Mashaba Mines (SMM) was one of the largest mining companies in the country. It’s three mines, Gaths Mine, King Mine and Temeraire had an annual output of over 140 000 tonnes, making it the sixth largest asbestos producer in the world. The company employed about 5 000 people at its peak. Not anymore. Business mogul Mutumwa Mawere owned SMM until government nationalised the company and placed it under administration in 2004. Legal battles continue to rage on as Mutumwa Mawere believes that he was unfairly dispossessed. Once the talk of the Midlands Province, SMM is now just a shadow of its former self. Some of the mines’ buildings are being leased to Great Zimbabwe University. There has been talk that investors have been found to resuscitate SMM, but on the ground nothing concrete has happened ever since. This is no easy task by all means. The company is now riddled with debt, some of which is from unpaid salaries and electricity bills. Infrastructure is old and dilapidated. Some of the equipment has been neglected underground and is now trapped there due to rising water levels. It will be very difficult to get the equipment up and running again. This may be the reason why investors are reluctant to come on board.
Still in the Midlands, the Zimbabwe Iron and Steel Company (Ziscosteel), once an imposing figure, has ground to a halt. It is difficult to believe that this was once the largest producer of steel in the country. In the 90s, the company employed about 5 500 people directly and 50 000 more indirectly through subcontracts and the like. Furthermore, Ziscosteel was exporting steel within Africa and further afield, in Europe and Asia. By 2010, the company was on its knees. Its debt ran into hundreds of millions and production reduced drastically from 1 million tonnes a year to about 12 000 tonnes a month. In 2011, Essar Africa Holdings expressed interest in taking over Ziscosteel but that deal surprisingly collapsed. Another investor, R & F from China is also yet to take ownership amid suspected shareholding hiccups in their deliberations with government. It must be noted that Ziscosteel owned Lancashire Steel and BIMCO which are also dead at the moment, non operational. The small town of Redcliff, where Ziscosteel is located, is now a ghost town. On site, equipment is evidently neglected. There are even reports that some of it was either stolen or vandalised by thieves and disillusioned former employees. Given those circumstances, investors are also not in a hurry to put in their money. They are likely to bargain for a lot of freebies if they are to take over a seemingly sinking ship.
Trust Bank was established in 1996 but things did not take long to deteriorate. By 2004, Trust Bank was already struggling. Depositors were reportedly failing to access their money due to financial constraints on the part of the bank. As a result, fellow banks like Stanbic started rejecting cheques from Trust Bank citing liquidity challenges. The bank’s management was also accused of gross mismanagement of depositors’ money and failure to put in place proper risk management systems. The bank’s licence was cancelled in 2005 amid allegations of abuse of deposits and other unethical banking practices. After some temporary reprieve, the bank was closed again in 2013 after its licence was cancelled, this time for failure to meet minimum capital requirements. The bank was also posting losses amounting to about $18 million since its inception. In essence, by revoking Trust Banks licence, the RESERVE Bank of Zimbabwe was trying to protect depositors from what it perceived to be unruly company owners and management.
When Hamilton Finance came onto the scene, many touted it as the answer to all their loan needs since the Reserve Bank of Zimbabwe and other banks did not have the resources. Flamboyant businessman, Frank Buyanga was its owner. The company did not last long, it was soon haunted by countless court cases amid allegations of defrauding homeowners who had failed to repay their loans. It is believed that some of Hamilton Finance’s customers were well connected political figures who, upon failing to repay their loans, and, faced with the possibility of losing their properties which they had put forward as security, accused the company of operating outside the law. At the height of all these court cases, Hamilton Finance closed down. Although the new political leadership in the country seems to be warming up to Frank Buyanga, it is not clear whether Hamilton Finance will ever be resurrected.
There are many other companies which have fallen by the wayside, be it due to the internal challenges, issues to do with the operating environment or government intervention. As Zimbabwe strives to make the environment more conducive, we are hopeful that these companies may come back to life and many more new ones will open up. After all, Zimbabwe should be open for business.