Govt to restructure IDC

HARARE - Government plans to restructure the Industrial Development Corporation (IDC) as part of efforts to revive the country’s ailing industry.

The corporation, wholly owned by government, plays a role of spearheading industrialisation in strategic sectors by adding value through industrial processes and capital formation.

However, the group, together with most Zimbabwean firms, has been affected by an economic decline characterised by limited credit lines, low savings, depressed investment, a huge external debt overhang and subdued productivity, among other constraints.

“IDC will be reconfigured and resuscitated to focus on industrial development, in terms of thinking that it will facilitate development of the industrial front,” said Industry minister Mike Bimha at an economic outlook symposium held on Wednesday.

This comes on the back of IDC’s efforts to court investors for a $140 million capital injection to revive its subsidiaries.

IDC controls more than 15 companies with interests across different industrial sectors.

The group, founded in 1963 through an Act of Parliament, is a self-financing, national development finance institution.

One of only a few State-owned firms to have consistently declared dividends since independence in 1980, IDC’s fortunes waned over the years.

Government has been unable to recapitalise the institution’s operations in order to revive its subsidiaries, with former Finance minister Tendai Biti previously ordering IDC executives to approach banks for loans.

It is currently putting up efforts to claim compensation of over $62 million from the Romanian government following a failed joint sheet glass manufacturing project with the latter’s ex-owned enterprise Romsit.

IDC points out that effort to claim damages from the company had previously hit a brickwall because it refused responsibility to pay citing that “it was now privatised and that when the project failed Romsit was still state-owned and so the Romanian government has to meet the obligations.”

This follows the 1999 determination by the Paris — based International Court of Arbitration that Romsit pays $4,2 million for failure to comply with the terms of the contract.

“The IDC has been greatly prejudiced by the non-performance of the Romanian contractor, (Romsit) and because of this failure a sheet glass making plant is lying idle in Kadoma and hundreds of jobs were lost,” IDC’s spokesperson Derek Sibanda has said.

Sibanda pointed out that the amount had now shot up to $9 million with interest and that IDC had demanded for a further compensation for the “expropriation of IDC’s rights” from the Romanian government through the International Court for the Settlement of Investment Disputes (ICSID).

He said Zimbabwe was presently importing all its sheet glass whilst such a plant exists.

“The amount paid in damages could be utilized for rehabilitating the glass plant as well as implementing the numerous greenfield projects which the IDC is currently pursuing,” said Sibanda.

He expressed the hope that after years of failing to secure compensation the Romanian government, would finally comply with the International Court of Arbitration’s determination, “as it is not contestable and that as a member of the European Union, it should respect the international trade regulations.

Comments (1)

Say something about the restructuring of IDC! Is it being sold by the Govt or is it re-financing its operations, and how?

Peter - 21 January 2014

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.