IDC struggles  to get  funding Mr Ndudzo
Mr Ndudzo

Mr Ndudzo

Golden Sibanda Senior Business Reporter
THE Industrial Development Corporation’s subsidiary companies require $40 to $50 million for working capital finance, but tight liquidity and banks restructuring of balance sheets have made access to affordable funding difficult.

The units under IDC’s expansive industrial empire, which cuts across a wide spectrum of sectors, are experiencing severe liquidity constraints as the rest of the economy, prompting the group to restructure its entire portfolio.

IDC general manager and group chief executive Mr Mike Ndudzo said that the restructuring, under a four pronged strategy, was in progress and at different stages amid strong interest for its units from investors from the BRICS.

He would, however, not elaborate on the nature of discussions with the prospective investors whom he said had expressed interest and with whom the industrial group had since signed agreements not to disclose any details.

The restructuring includes reducing, selling-off and entrenching its positions, chiefly, to deal with financial limitations that have affected the units’ operations before and after dollarisation of the economy in February 2009.

But before IDC completes discussions with potential investors for capital injection through either dilution or outright exit from units under its expansive empire, the firms require bridging finance to sustain or grow their operations.

“I would say that we need a minimum of $40 million to $50 million, but we are being innovative. Where we can engage with suppliers for credit arrangements or consignment stock, we are doing so,” the IDC boss said in an interview.

He said that the group had also entered into structured arrangements for toll manufacturing as part of numerous innovative initiatives the IDC boss said had enabled the group and its units to keep their heads above the water.

Mr Ndudzo said that it was currently virtually impossible to get working capital support from banks battling to clean up their balance sheets and reduce non-performing loans as they position themselves for the interbank market. The interbank market, where banks can borrow from each other to cover short positions, resumed recently after funding support from Afreximbank.

Banks, due to tight liquidity and inherent risk in the market, did not trust bailing each other out as problems at one of the banks could result in their money being trapped or lost and constrain their ability to meet own obligations.

Mr Ndudzo said that most financial institutions were extending credit while, at best, only agreeing to restructuring (existing facilities) under the framework of the central bank’s Zimbabwe Asset Management Corporation.

He said “In terms of formal banking, there is not much going on,” hence the need to arrange for credit and or consignment stock, toll manufacturing and customer prepayments arrangements to mitigate effects of the liquidity crisis.

Mr Ndudzo said that IDC would reduce its interests in bigger units such as Chemplex Corporation, Olivine Industries, Willovale Mazda Motor Industries and exit, totally, smaller firms such as Amtec and Zimbabwe Grain Bag.

IDC also intends to exit, outright, from units such as Stone Holdings, Deven, G and W, Almin Metal Industries, Surface Investments, National Fertilizer Industries and Zimbabwe Copper, which form part of its portfolio of small firms.

The other category comprises subsidiaries that IDC still has strong interest in and these include Sunway City, Detema Ceramics, Lupane Gas Company, which the State owned industrial enterprises has earmarked for development.

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey