By STEPHEN KAPAMBWE –
THE Industrial Development Corporation (IDC) has been hailed as a new vehicle for Zambia’s economic growth.
Since the closure of the Zambia Industrial and Mining Corporation (ZIMCO) and other key corporations such as INDECO and FINDECO in the 1990s, State-owned enterprises (SOEs) in various sectors have been operating under the direct supervision of line ministries within Government.
However, it was observed that whereas line ministries are strong in providing policy guidance, they did not necessarily possess the requisite commercial and investment expertise and resources needed to ensure the positive performance of the SOEs under their supervision.
As a result, the enterprises were often unable to give Government a return on its investment and contribute to the Treasury by way of dividends and taxes.
The IDC was created as a policy initiative of the Patriotic Front (PF) Government as enshrined in the party’s 2001–2016 party manifestos.
During the official opening of the third session of the 11th National Assembly on 20th September 2013, late President Michael Sata announced Government’s intention to reorganize and reform the system for overseeing and managing SOEs, assets and parastatals to ensure the State maximises their contribution to job creation and economic development.
Cabinet at its 32nd meeting held on December 16 2013, approved the establishment of the IDC and the transfer of Government shares in all SOEs incorporated under the Companies Act and the Banking and Financial Services Act from the ministry of Finance to the IDC.
The corporation was going to hold shares on behalf of Government, supervise and manage all GRZ’s shares in the SOEs.
During the same meeting, Cabinet also approved the creation of a Sovereign Wealth Fund (SWF) so as to safeguard the interest of posterity.
One underlying reason Cabinet established the IDC was the realisation that Zambia had a heavy reliance on mining while at the same time the State had not been able to maximize the revenue potential of its numerous SOEs.
In most cases, the SOEs had continued to survive on Government subventions.
This situation impacted negatively on the enterprises in terms of investment, growth, governance and accountability.
Government’s shareholding in the SOEs represented an important resource which, if properly utilised, could bring much more value to the country.
Therefore, the IDC is an intervention of the Government consistent with international best practices by emerging and developing economies such as Singapore, Kuwait, China, Malaysia, South Korea and South Africa.
These countries have all created corporations equivalent to the IDC in order to provide an additional source of revenue and be able to preserve the wealth of their countries for future generations.
In February 2014, the IDC was incorporated as a company limited by shares under the Companies Act and is 100 per cent owned by the minister of Finance pursuant to the Minister of Finance (Incorporation) Act Cap 349 of the Laws of Zambia, for the President on behalf of the Government of the Republic of Zambia (GRZ).
The corporation commenced operations in March, 2014.
The IDC is incorporated under the Companies Act to hold and manage the assets previously held by the minister of Finance on behalf of the Zambian Government.
The corporation was established to own and manage these investments on a commercial basis, allowing the ministries of Finance; Commerce, Trade and Industry and all others to focus on policy making.
The IDC’s established mission is to contribute to Zambia’s economic development, industrialisation and job creation by nurturing effective and commercially driven strategic investments.
The corporation operates under the provisions of the Companies Act and it is neither a Government agency nor a statutory body.
Like any other commercial company, the IDC pays taxes to tax authorities, will distribute dividends to its shareholder, who happens to be the minister of Finance, and has its own board of directors and a professional management team.
It is chaired by the President for the purpose of protecting national interests.
The President also appoints, terminates, or renews the members of the IDC’s board of directors.
But in most other respects, the IDC operates as an independent commercial investment holding company.
Following up on Government’s approval in 2013 to establish the IDC, President Edgar Lungu in 2015 announced the transfer of shares of SOEs from the ministry of Finance to the corporation.
By then, the enterprises to be superintended and owned by the IDC had a net value of US$2 billion in companies’ portfolio.
The enterprises cut across 12 economic sectors namely agriculture, energy, education, financial services, information and communications technology (ITC), infrastructure, manufacturing, medical, mining, real estate, tourism and transport and logistics.
The companies are Nanga Farms, NIEC Business School, Afrox Zambia, Indeni Petroleum Refinery, Zesco, Indo-Zambia Bank, Zambia State Insurance Corporation, ZANACO PLC, Times Printpak, Zambia Daily Mail, Zambia Education Publishing House and Zambia Printing Company.
Others are Zamtel, Engineering Services Corporation (ESCO), Lusaka South Multi-Facility Economic Zone, Mulungushi Textiles, Mupepetwe Development Company, Nitrogen Chemicals of Zambia, Zamcapitol, Lusaka Trust Hospital, Medical Stores, Kagem Minerals, Kariba Minerals, ZCCM Investment Holdings, Mulungushi Village Complex, Mukuba Hotel, Mulungushi International Conference Centre, Zambia International Trade Fair (ZITF), Mpulungu Harbour Corporation, Zambia Airways 2014 and Zambia Railways.
President Lungu said following the share transfer, all line ministries would focus on policy-making, thereby giving the IDC direct mandate and authorisation on behalf of the Government to oversee performance and accountability of these SOEs.
This is in line with the IDC’s oversight responsibilities which include all aspects of governance, commercial, financing, operational and all matters incidental to the interests of the State as shareholder.
President Lungu said the SOEs under the IDC would from 2016 onwards no longer receive funding from the national budget and therefore reduce the burden on the Treasury whilst freeing up the available scarce resources towards poverty alleviation programmes.
He said the IDC would work towards maximising the value of GRZ shareholding and ensure that SOEs contribute to the Sovereign Wealth Fund, which would focus on stimulating investment in strategic non-mining industries and increasing exports.
“IDC is a tool to enhance domestic capital formation, wealth creation and preservation by focusing on exploiting our country’s advantages in natural resources and actively developing industries and enterprises to create jobs for our people,” President Lungu said.
President Lungu directed the IDC to immediately review and re-constitute boards of all its subsidiary companies to realign them with the industrialisation and job creation agenda.
President Lungu said the IDC was introduced in line with the Government determination to make Zambia adaptive, innovative and determined to change the way it does things.
In his speech entitled, “Embracing a transformational culture for a smart Zambia now”, to Parliament, Mr Lungu said to attain transformation, Zambia needs to “change the way we think, behave and do things.”
He said the country’s transformational culture should start with each and every person getting involved, leaving the past behind and embracing positive attitudes.
He said the country should transform itself by, among other things embracing innovation and entrepreneurship; adopting a new paradigm to resolving current and future challenges.
Embracing technology to simplify and quicken provision of services; re-aligning national institutions where necessary to make them more responsive to the needs of the nation; being patriotic and putting national before personal interests; and promoting cost effective operations in government to eliminate waste and abuse of public resources.
He emphasised on the need to: transition towards a green economy; fostering win-win partnerships within and outside the country to achieve national development and fulfil the needs of Zambians; creating smart institutions and smart budgeting that promote a co-ordinated government approach to public service delivery; and, promoting long-term planning.
His vision was to use the transformational culture to make Zambia more prosperous, graduating from lower middle income to a developed country by 2064 in a spirit of equity and inclusiveness.
In line with these ideas that sound like terms of reference, the IDC was tasked with the duty of providing an opportunity for the Government to accelerate industrialisation, achieve economic diversification and maximise economic growth potential as well as wealth creation.
The corporation will ensure that Government optimises the performance of the current stock of SOEs and facilitate the creation of new enterprises in collaboration with the private sector.

. CHIPWENDE

Building on the 480,000 jobs Government has created in the last four years, the IDC, lead by chief executive officer Andrew Chipwende, has already set its sights on creating a million new jobs in the next five years.
On its part, the corporation plans to sell bonds and stakes in State-owned companies to boost investment and economic growth in Africa’s second-largest copper producer.
It plans to restore profits at the loss-making Government entities and reinvest any dividends.
The corporation has already started actualizing its objectives.
Recently, the IDC announced the forty-eight bidders that have submitted pre-qualification applications to develop 2 x 50MW solar PV IPP projects to stem the current power deficit.
A statement published on the corporation’ s website said high caliber investors were interested in the grid-scale solar power initiative following the closing of submission of applications for prequalification last month.
The initiative was a follow up to President Lungu’s directive for the IDC to call for applications in order to commence the process of redressing the current power deficitand resultant national crisis.
This initial phase formed part of the drive for urgent development and installation of at least 600 MW of solar power.
The corporation is this month expected to announce the prequalified bidders once the pre-qualification applications have been evaluated.
The bidders would then be provided with further information on the two solar power projects and will proceed to the final round of an open, transparent and competitive bidding process, out of which two winning bidders will be selected on the basis of the lowest proposed cost of electricity.
The winning bidders will finance, construct and operate as independent power producers (IPPs) for 25 years.
Projects like these involving Government and the private sector are expected to be identified and replicated not only in energy but in agriculture, education, financial, information and communications technology, infrastructure, manufacturing, medical, mining, real estate, tourism as well as transportation and  logistics.
The IDC has already made its presence relevant to the agriculture sector where it signed a memorandum of understanding (MoU) with Cargill – an agro company – on setting up mini-mills in various rural areas of the country rural.
A statement released jointly by the IDC and Cargill said the MoU signed last September would be active in cotton origination, ginning, grain and oil seeds origination and trading.
This is but just the tip of what the IDC is doing as an instrument of not only transforming the Zambian economy but also building it up into a developed one by 2064.