- ZECO has managed to reduce its annual losses by a significant 84% for the full year ended December 2023
- The company has been operating in a state of consistent financial loss for over a decade
- Management crisis remains the biggest elephant in the room
Harare- ZECO, a company owned by flamboyant businessman Philip Chiyangwa, has significantly reduced its annual losses for the full year ended 31 December 2023 by 84%, with a loss of ZWL3 billion compared to the previous year's substantial loss of ZWL18.96 billion.
Zeco Holdings Limited, formerly known as Resco, operates through its subsidiaries and is involved in the manufacturing of rail wagons, locomotives, roller shutters, electronic garage doors, steel windows and doorframes, burglar bars, filing cabinets, and agricultural implements. In 2008, the company acquired the assets of Corbett Holdings (Private) Limited and its subsidiaries, including Electrical and Mechanical Suppliers and Importers (Private) Limited, Halgor Estate (Private) Limited, FaiT Lux (Private) Limited, and Zimplastics (Private) Limited.
Despite being in operation for over a decade, ZECO has struggled to achieve profitability. In 2022, the company attempted to shift its business focus to property and real estate after divesting its rolling stock assets. The uncertainties surrounding the railway transportation system, mine closures during the Mugabe era, and the high level of informality in the mining sector have negatively impacted the company's revenues.
To improve its financial situation, ZECO sold its rolling stock assets for US$4.5 million and ventured into the real estate and property business.
However, mismanagement has been a significant issue for the company, in addition to the challenging economic environment. Philip Chiyangwa appointed his sons to top executive positions, and they have allegedly used their positions to embezzle funds from the company instead of implementing strategies to revitalize it.
This leadership crisis has contributed to the company's struggles, despite efforts by President Emmerson Mnangagwa to improve the economy, particularly the mining sector.
In November 2023, ZECO underwent a significant leadership change, which involved the replacement of Edmund Chiyangwa, Philip Chiyangwa's son. Edmund, who held an executive position without a clearly defined role, fraudulently tampered with the company's property deeds in an attempt to obtain a secret mortgage and take ownership of his father's property.
In 2019, both Edmund and Brian, who were executives and sons of Philip Chiyangwa, were sued by Getbucks Microfinance Bank for failing to repay a debt of up to US$800 000. The issue was eventually resolved using company funds.
Instead of replacing his sons with qualified and responsible individuals, Chiyangwa replaced Edmund with another son, Bruce, who exhibited similar behavior.
This situation serves as a cautionary tale for business owners regarding the practice of appointing family members to management positions based solely on family ties, rather than considering qualifications and merit.
When irresponsible family members occupy top positions in a business, personal and emotional dynamics can make it challenging to take legal action against them if necessary, allowing them to continue exploiting the business without making any meaningful progress.
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