Why Tazara is in a fine mess.

Author:Mbewe, Austin
Position:ZAMBIA/TANZANIA
 
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Lack of recapitalisation and a poor corporate culture have seen the fortunes of the jointly owned Tanzania-Zambia Railway Authority (Tazara) dwindle over the years. It is a classic case Where beneficiaries of a gift have to continually ask the benefactor--in this case China, which built the railway line-to help maintain the gift. Austin Mbewe reveals how those who try to reform the company or refuse to toe the political line, are hastily shown the exit.

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IT HAS TAKEN THE CHINESE GOVERNment-the financiers and builders of the railway line--to sink in more money to keep the Tanzania-Zambia Railway Authority (Tazara) afloat. The 1,860km railway line, which stretches from Kapiri in Zambia's Central Province to the Tanzanian business capital of Dar-es-Salaam, is by far the most outstanding monument of friendship between China and the joint owners of the railway line (Zambia and Tanzania). Tazara served and saved Zambia's economy during the liberation wars in Southern Africa.

Because of the liberation wars in Angola, Mozambique and South Africa, Zambia's only route to the sea was in the north. Even today, the railway line continues to be one of Zambia's major trade routes, carrying copper, the country's main export, as well as imported goods that keep the economy going.

This fact is never omitted from government speeches, with bureaucrats constantly reminding Western governments how they deemed the construction of the rail link impossible yet China made it a reality. Funded and built by the Chinese government through an interest-free loan of approximately $500m, the railway began commercial operations on 1 July 1976. However, the current state of this highly prized asset leaves much to be desired. Since the Chinese completed and handed over the project, the governments of Zambia and Tanzania have not made any new investments in the company. Despite the huge potential to operate profitably, given its immense capacity and the range of industries it services in both countries, Tazara has been underperforming and making heavy losses over the years. According to figures presented to the Zambian parliament last year by the Ministry of Communications and Transport, Tazara's debt to various institutions stood at $725m. The debt has since gone up (to $1bn according to a recent estimate).

Tazara's book value is not something worth singing about. In simple terms, the company merely hangs on to the continued goodwill of the Chinese. It...

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