THE Industrial Development Corporation (IDC) is seeking to raise $1,5 trillion to venture into the manufacture of agriculture and mining equipment. Of the $1,5 trillion, $1,
3 trillion is for greenfield projects while $200 billion is for existing projects.
The envisaged projects include vehicle component manufacturing and agricultural and mining implements and spares production.
In a written response to questions raised by the Zimbabwe Independent this week, IDC confirmed the ambitious venture, which would add to its portfolio.
“The $1,5 trillion is at 2004 prices and is expected to fund the projects over the next three years,” Peter Madara, group financial controller of IDC, said.
He said out of the $1,5 trillion, $898 billion was the foreign component while the local component was $602 billion because production equipment was largely imported.
When quizzed how IDC hoped to get the money, Madara said an appropriate mix of debt and equity was needed to finance projects of such magnitude.
“Technical, technological, financial and market access joint venture partnerships are structured to share the risk, being capital and market entrance acceptability,” Madara said.
The equity portion of the capital would consist of contribution by IDC from own resources or new injection by the parastatal‘s shareholders, and joint venture partners, he said.
Madara said foreign partners would generally finance the imported technology content whilst IDC would finance local civil works.
“Because joint ventures are structured in order to implement these projects, the corporation’s submission to the Public Sector Investment Programme (PSIP), which is the public sector equivalent of a private sector rights issue, was for $357 billion for 2005,” he said.
In terms of technical expertise in the manufacture of the motor components and mining equipment, Madara said IDC did not have a mining operation but had carried out a study that revealed that there were skilled workers in the country who could be employed in mining ventures.
“We also seek joint ventures in order to secure such expertise and brand standards acceptable to the market.”
He said IDC had an agreement with the Scientific Industrial and Research Development Council for the research and development input of the projects.
The parastatal intends to manufacture motor components with the highest local content, for instance steel alloys, leather, cotton and platinum. Madara could not say when production would commence but said this would be within the shortest possible period.
IDC was incorporated through an Act of parliament in 1963 to invest in industry as a state agency. The IDC Act was amended in 1984 to allow the corporation to promote investment and economic co-operation across borders.