IDC to maintain shareholding in strategic subsidiaries

27 Aug, 2017 - 00:08 0 Views
IDC to maintain shareholding in strategic subsidiaries

The Sunday Mail

Business Reporter
The Industrial Development Corporation of Zimbabwe (IDC) will maintain a significant stake in its subsidiaries, which have a pivotal role to play in economic development.

This comes after Cabinet this year approved that IDC should be remodelled and start providing development finance to the private sector and move away from the acquisition of companies. However, IDC is likely to protect its control in 100 percent-owned Chemplex Corporation, a company which mines and beneficiates phosphate rock used in the manufacture of fertilisers.

Chemplex has six subsidiaries, namely ZimPhos, Dorowa, Chemplex Marketing, Chemplex Animal and Public Health, GD Haulage and G and W Industrial Minerals. IDC, which is in the market soliciting for $100 million to start its new role, will dispose of its shareholding in mostly smaller companies under its portfolio while maintaining a significant control especially in fertiliser companies.

Industry and Commerce Minister Mike Bimha told The Sunday Mail Business that remodelling IDC will not be an easy process but Government remains optimistic.

“IDC has been the largest shareholder in most companies under its portfolio, but under the new arrangement IDC will only maintain control in companies of strategic importance. We are also looking for investors for those companies of strategic importance. The State investment vehicle still owns small firms with potential. Once the process of creating a development finance institution is complete, the same small companies to be disposed of are set to benefit from IDC funding,” said Minister Bimha.

Minister Bimha said that the IDC is going to play a huge role in addressing the financing gap in the industry. “We have reached a position as Government where we think IDC has to play its role as a development finance institution. In agriculture we have Agribank and infrastructure is anchored by the Infrastructure Development Bank of Zimbabwe.

“Therefore, we need to come up with our own institution to anchor industrial development through providing finance for our local manufacturing businesses. The RBZ is also in the process of trying to avail further funding to this cause,” said Minister Bimha.

Minister Bimha said the intention is to provide source of funding for companies operating in critical areas to continue producing, support small to medium enterprises graduating to being large-scale companies and help companies cushioned by measures such as Statutory Instrument 64 to retool and acquire new technology.

“IDC is not only going to give money to companies but it will also undertake supervision and nurturing of the companies. Small companies who would have graduated to big firms are also set to benefit from the funding,” he said.

Minister Bimha said IDC has engaged Government and the Reserve Bank of Zimbabwe as it seeks to align its operations to the amended Banking Act. Minister Bimha said the reorganisation would be done on a case-by-case basis because the companies had different needs.

Meanwhile, IDC Zimbabwe is currently in advanced talks with the Industrial Development Corporation of South Africa for a $20 million loan facility. The negotiations with IDC South Africa come after IDC Zimbabwe has finished the repayment of a six-year $15 million loan facility unveiled by the South African finance institution that went towards the recapitalisation programme of its investments. There are also indications that the Reserve Bank of Zimbabwe is coming up with a facility to fund this new initiative.

IDC’s Zim mandate has been to drive industrialisation but in the past the State investment vehicle diversified and started to run companies which it owns.

But under the new role, IDC will extend financial assistances to startups, critical areas identified by Government (leather and leather products, steel and steel products, pharmaceuticals, food

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