About thirteen (13) Industrial Development Corporation – IDC, subsidiary companies are reported to have incurred losses amounting to over K2.6 billion (K2, 600,986,817) between the economic year 2021 and 2022.
The auditor general report for the financial year ended 31st December 2022, has revealed that the thirteen (13) companies incurred losses amounting to K746,084,000 and K1,854,902,817 in 2021 and 2022 respectively together totaling about K2.6 billion.
Of the 13 subsidiary Companies, included, the Zambia Consolidated Copper Mines -ZCCM Investments Holdings, Zambia Railways, Infratel, Times Printpak, ZESCO, Zamtel, and Zambia Airways Limited.
Others include, Indeni Petroleum Limited, Superior Milling Company, Zamplam Limited, Mulungushi Village Complex Limited, Mukuba Hotel Limited and NIEC Business School Trust.
The report further revealed that consequently, out of the thirty (30) State-Owned Enterprises (SOEs) in which the IDC holds 62.28 to 100 percent shareholding, only five (5) declared dividends amounting to K61,334,600 and K62,012,587 in 2021 and 2022 respectively.
“During the period under review, IDC issued ten (10) loans amounting to K170,222,517 to six (6) of its subsidiaries. The repayment periods ranged from fifteen (15) to sixty (60) months. However, a total of K196,421,914 including interest remained outstanding as of 31st December 2022.”
Meanwhile, an examination of financial and other records maintained at the IDC for the financial years ended 31st December 2021 and 2022 revealed as of 30th September 2023, the IDC had not produced audited Consolidated Financial Statements for the years ended 31st December 2018 to 2022 and no sanctions were meted out on subsidiaries that had not prepared their financial statements.
In addition, eight (8) State Owned Enterprises had not produced audited financial statements for the financial years ended 31st December 2020, 2021, and 2022 as of 30th September 2023.
Corporate governance structures of the subsidiaries have also been hit hard, with six SOEs operating without Boards of Directors for periods ranging from six to eleven months as of 30th September 2023. This situation could have hurt the provision of policy and strategic direction to the subsidiaries.
Further, the report adds that the Approved Board Composition of the Committees – Investment and Portfolio Committee, which provides for seven members, including three co-opted members namely; an Investment specialist/Development Economist, a Senior Banker, and an eminent business person, has not been followed. “A review of the actual composition of the committee revealed that all the members were Directors of the Board, and none was a co-opted member.”
The IDC’s discouraging performance and lack of accountability have raised serious concerns about its ability to manage and regulate the SOEs effectively.
With billions of Kwacha lost and no clear plan to turn things around, it remains to be seen how the government will address this issue and prevent it from spiraling out of control.
