Tawanda Musarurwa Business Reporter
Finance and Economic Development Minister Mthuli Ncube will capitalise the Industrial Development Corporation (IDCZ) to the tune of $240 million as the Corporation revives its development financing role. The proposal was made during the announcement of the 2020 National Budget yesterday.
“Treasury will capitalise the Industrial Development Corporation by $240 million to enable it undertake its mandate effectively,” said the Finance Minister.
“IDC will focus on promotion of research and development to increase productivity, diversification and broadening product range and creating opportunities for job creation.”
The IDCZ was established in 1963 through the IDCZ Act (Chapter 14:10), which allows the Corporation to promote investment and economic co-operation across all sectors.
The Corporation currently holds investments shareholding in various companies including Chemplex, Modzone, with foreign direct investment partners like Italians in dimension stone mining and processing, Indians and Singaporeans in Surface Wilmar Investments and Olivine Holdings or agro industry, Chinese in cement, Iranians at Modzone and Motira, and local conglomerates TA Holdings at Sable chemicals and the Zimbabwe Fertiliser Company.
But in line with Government’s moves to restructure its parastatals and State enterprises, the IDCZ has been reducing in shareholding in several of these subsidiaries.
And the $240 million fund is part of longstanding Government plans for the Corporation to play a bigger role in development financing.
Earlier in May, Treasury initiated the process with a $30 million seed capital injection.
To the extent that the IDCZ resumes its original mandate, the Corporation will help to advance the industrialisation thrust through actualising value chains and implementing the Local Content Strategy, initially targeting support to sub-sectors, including pharmaceuticals; tyre production; hides/leather processing; and steel production, said Minister Ncube.
IDCZ’s mandates include: to establish and conduct any industrial undertaking, to facilitate, promote, guide and assist the financing of: new industrial undertakings (including small and medium scale), schemes for the expansion, better organisation and modernisation of and the more efficient carrying out of operations in existing industries and industrial undertakings; as well as to implement Government policy in regard to decentralisation of industry, choice of technology and any other matter which the Minister (Minister of Industry and Commerce) may specify.
The Corporation also undertakes the development of management and technical expertise in the carrying out of industrial undertakings; and takes measures to acquire direct and effective control of its investments and to that end to ensure that industrial development in the country are planned, expedited and conducted on sound business principles.
IDCZ has already commenced the process of disposing of its controlling shareholding in its underperforming automobile firms, Willovale Motor Industries and Deven Engineering.
The Corporation owns 91 percent of WMI and 100 percent of Deven.
Meanwhile, the 2020 National Budget will provide a guarantee scheme for local industry, which has been struggling to access cheap foreign capital due to the high country risk.
“Treasury will also, provide a guarantee scheme for companies to access capital from financial institutions for retooling purposes. Overall, the Ministry of Industry and Commerce is allocated $368 million.”