‘IDCZ a let down’
LIVINGSTONE MARUFU
The Industrial Development Corporation of Zimbabwe (IDCZ) has failed to serve the manufacturing industry as it struggled to raise capital and save firms from collapsing.
IDCZ, which thrives to be a dynamic and responsive driver for sustainable industrial development in Zimbabwe, is dependent on the government on funding hence lacks capacity to fund other companies.
Confederation of Zimbabwe Industries chief economist Cornelius Dube told the delegates and the industrialists’ body annual congress that there is a missing link with IDCZ finance and it should take a leaf from its counterparts in South Africa.
“The missing link in IDCZ is the ability to transform acquired firms into viable enterprises with exits and the ability to raise the funding from operations independently from government grants,” Dube said.
He said the decision to acquire some firms should be based on merit with possibilities of turning them around and positioning innovation and transformation at the centre of acquisitions to avoid holding on to outdated production methods. This, Dube said, was missing from IDCZ.
“IDCZ should attract partnerships and collaborations for financing larger scale industrial projects that come from successful initiatives and that is not the case,” he said.
The challenges facing IDCZ come as its counterpart in South Africa is on a growth trajectory.
IDC South Africa has more than doubled its funding approvals in its 2022 year and improved the health of its balance sheet as it plans to ramp up support for black-owned companies and disburse R107bn (US$6.15bn ) over the next five years.
The IDC’s strategic investments into the resources sector, currently enjoying a boom in commodity prices, helped with a 34.8% rise in revenue to R21.7bn (1.24bn) in the group’s year to end-March, with operating profits jumping 81.3% to R5.77bn (US$331.95m).
The IDC South Africa’s funding approvals jumped 146% to R16bn (US$920m) and disbursements 14% to R7.2bn (US$414.2m).
An economist who preferred anonymity told Business Times that IDC South Africa is a testimony of a working innovative and responsive development finance institution for the creation of industrial capacity for the provision of quality and competitive goods.
“For donkey years now, IDC Zimbabwe has done nothing to capacitate companies. Instead it needs money from the government to finance its operations later alone to push the industry agenda to achieve Vision 2030.
“IDCZ is just another looting scheme,” an economist said.
Dube said IDC was designed to venture into “green pasture” investment projects that were considered too risky for the private sector.
“IDCZ is expected to nurture the firms and eventually sell them to the private sector to finance a revolving fund.
“Since 2019, IDCZ has been running the Industrial Capital Fund for companies in the manufacturing sector into value addition and beneficiation but it was mainly funded by the government, although IDCZ can also borrow from the market,” Dube said.
Current industrial policy and fiscal policy have provisions for making IDCZ a finance solution for industry.
IDCZ is a wholly State-owned entity mandated to spearhead industrialisation in strategic sectors.
Its role is to add value through industrial processes and capital formation (foreign direct investment) to create wealth, employment and industrial development in the country.
Some of the companies that IDCZ has interest in include Chemplex, Zimglass, Olivine Industries, Amtec, Surface Investment and Willowvale Mazda Motor Industries.
