eBusiness Weekly
Loan to support fertiliser chemical value chain
SA giant seeks new opportunities in Zimbabwe
Golden Sibanda and Tinashe Makichi
South Africa’s Industrial Development Corporation has pledged significant equity and debt investments in Zimbabwe and will kick-start the process with a $50 million loan to its Zimbabwean namesake for rehabilitation of the fertilizer value chain.
IDC chairman Hebert Nkala said IDC SA, one of the largest industrial investors on the continent, had visited Zimbabwe to discuss investment into IDC Zimbabwe’s fertilizer value chain as well as other deserving firms within and outside the group.
According to Nkala, the IDC SA delegation had come into the country to scout for opportunities across industries, including energy and power, tourism, agro-processing, manufacturing and mining.
The State owned Southern Africa industrial conglomerate sent a high powered delegation to Zimbabwe this week, which paid a courtesy call on Acting President Retired General Constantino Chiwenga at his Munhumutapa offices on Wednesday.
Nkala said the courtesy call on the Acting President was as a result of the latest visit to Zimbabwe facilitated by South African businessman Robert Gumede who promised to $1,2 billion investments in key sectors of the economy when he visited weeks ago.
The briefing to the Vice President entailed updates on IDC SAs previous investments in Zimbabwe, including the $20 million IDC Zimbabwe had received in 2012 and fully paid back last year.
“Today we are negotiating a $50 million line of credit with IDC of South Africa largely for the rehabilitation of Chemplex Corporation and the fertilizer industry, but also for supporting FDI, that is funding other companies that are currently struggling and need financial support,” Nkala said.
Nkala said the lines of credit from IDC SA were structured differently from loan provided by commercial banks, which provide funding facilities that tend to be short-term and expensive.
“FDI from IDC South Africa is long term and cheap; it follows business cycles, a development finance institution for reindustrialization and is sensitive to the patterns of reindustrialisation.”
Nkala said previously, the financiers were sensitive to the economic situation, but were more positive this time around and were prepared to negotiate longer term and cheaper loans.
IDC SA, already exposed to the fertilizer industry through similar investment, is a fitting investor in IDC Zimbabwe given their financial capacity and knowledge of the industry.
The high powered delegation from IDC SA was led Eric Mahamba Sithole; functional champion or director: Rest of Africa Support.
Nkala said while the main focus was on Chemplex, IDC (Zim) is also seeking funding for its development finance role, as provided in provisions of the IDC Zimbabwe Act of 1964.
This comes as a number of IDC Zimbabwe units, under its expansive cross sector empire, are struggling with viability and operating at low capacity or have closed due to financial distress.
Sithole said the visit to Zimbabwe was meant to explore further investment opportunities in various sectors of the economy. He said Acting President Chiwenga had showed “a lot” of support for the initiative and assured IDC (Zim) of his full support.
“He (Acting President) said they (IDC Zim) should not hesitate to call him, the President and other Government officials because the mood the country at the moment is that of a growth trajectory to create jobs, rekindle the economy and revive the glory of the past in terms agriculture, commerce, manufacturing and industry in general,” Sithole said.
“We are looking to invest, quite frankly, in many sectors although we can talk about where we are starting from now. We are looking at chemical beneficiation in terms of fertilizer processing, we will go into to other sectors we have seen and are aware of.
“Since tourists will come to this country in greater numbers, there must be hotels and other facilities so that they are comfortable and would want to come back again,” he said.
IDC SA is also scouting opportunities into agro-processing or beneficiation of crops and fruits from Zimbabwe to make sure that the country gets returns instead of exporting raw commodities.
The investment will be shared equally between debt and equity.
“We are looking at putting more debt investment into the economy so that they will be downstream beneficiation and investment. Zimbabweans know best where to put money in the economy, what we are good at is providing the funds at affordable rates.”
Sithole said IDC SA has previously invested in the country including funding support to Meikles Hotel, Crowne Plaza Monomotapa, Econet Wireless, Agribank and the mining sector. Sithole said IDC SA was looking to venture into other sectors.
Source at IDC Zimbabwe added that the South African group had plans to invest in the fertiliser value chain and providing funding for South African investors willing to invest in Zimbabwe.
The fertiliser value chain will mean IDC SA will invest in Zimphos, Dorowa Minerals and ZFC which forms part of Zimbabwe’s fertiliser industry.
This will not come as a surprise because IDC SA is already invested in one of South Africa’s biggest fertiliser companies, Foskor. The company is a producer of phosphates and phosphoric acid with international exposure.
IDC SA is also looking at funding some South African investors for instance, Robert Gumede who has since visited Zimbabwe to scout for investments.
Founded in 1940, IDC SA has implemented South Africa’s industrial policy for more than 70 years and established, among others, the petro-chemicals and minerals beneficiation industries.
