The Industrial Development Corporation of Zimbabwe (IDCZ) says it failed to secure a second loan facility from IDC South Africa, which has cited sanctions on some IDCZ subsidiaries by the United States government.
The US imposed “targeted” sanctions on 98 individuals and 68 state-owned entities in 2003, reacting to allegations of gross human rights abuses and electoral fraud levelled against President Robert Mugabe’s administration. Mugabe denies the allegations, and argues that the sanctions were revenge for his expropriation of white owned land which he redistributed to landless blacks.
IDCZ says it has lost over $20 million to the United States Treasury Department’s Office of Foreign Assets Control with the Zimbabwe Fertilizer Company, one of its subsidiary, still having $5 million frozen to date.
IDCZ chief executive officer Mike Ndudzo said in an interview that the company has been re-negotiating a $10 million loan facility which IDC SA turned down on the basis of sanctions.
“IDC South Africa gave us as a group an $18 million loan facility through Agribank. However, when we applied for the second tranche, they cited sanctions and denied us the facility,” he said.
Ndudzo said the facility was aimed at re-capitalizing its struggling business units. He said in the medium term, IDZ needs an injection of $104 million to increase capacity across its subsidiaries.
He said the 15 IDCZ subsidiaries were struggling to do any telegraphic transactions with any international finance institution,making it difficult to pay for raw materials or make other payments.
Apart from seeking loans, the group has tried to raise capital through disposal of stakes in its various subsidiaries, but it has failed to find buyers.
The company plans to sell its interests in Stone Holdings, Amtec, Deven, G and W, Almin Metal Industries, Surface Investments, National Fertiliser Industries, Zim Copper and Zimbabwe Grain Bag.
Large investments comprising Chemplex Corporation, ZimGlass, Olivine Industries and Willowvale Mazda Motor Industries need refurbishment capital and have been earmarked for ownership dilution.
Meanwhile, Ndudzo said the group is now close to finishing re-payment of the $18 million loan and will explore other ways to recapitalise its units.
The IDC, which was formed in 1963 through an act of Parliament, is a self–financing institution whose business interests include fertiliser production, agro-processing, manufacturing, mining, horticulture, retail, services among others.-TheSource