Finance Minister Dr Bwalya Nga’ndu says government will consider doing away with State Owned Enterprises that are in perpetual position of loss making and are not creating any value.
Speaking when he received dividends from ZCCM-IH, Tuesday, Dr Ng’andu said government would not help any State Owned Companies which turned to the Treasury for additional financing.
“What do we do with the companies that don’t pay dividends? I think we can expand the question to ask what we do with companies that are in a perpetual position of loss making and therefore, are not creating any value and often turn to the Treasury for the additional financing. Clearly, that situation cannot continue because these companies were not created for the purpose of becoming a perpetual drainer of
resources from the Treasury. There are a number of things we will do. We shall task the management and boards of such companies to, if necessary, down size operations so that they are clearer about what they need
to do and how they can operate more profitable and also to come up with strategies that will help them to achieve their goals,” Dr Ng’andu said.
“And if that doesn’t work, we have another option which is changing the management or the board or both with the view that maybe by bringing the new management, things can change. Otherwise we cannot make a
business case for a particular company to exist if it is failing to make profit. I think the option of doing away with such companies will come in.”
He noted that some companies had not yet finalized their financial statements.
“A number of companies have not finalized their financial statement so to be able to know how many companies will or will not pay dividend in the course of 2019 is too early to say at the moment. But what I can tell you is that in 2018, dividends were paid by IDC, Zambia National Building Society, Zambia Airport Cooperation and ZAMA,” he said.
Dr Ng’andu said government expected all companies within the IDC group of companies to pay dividends without any difficulties.
“I want to say this, that this occasion this morning really is more of an occasion that is meant to send a message to all companies within the IDC group of companies to which government has shares in. You see, ordinarily, there should not be any difficulties in receiving dividends
from these companies because that is what companies are supposed to pay dividends to shareholders in a normal way. So I want this to go out as a message to all of them that we expect them to pay dividends
because the reason why government invests in these companies is to ensure that there is adequate return,” Dr Ng’andu said.
“It is worth noting that the ZCCM-IH has continued to create value in order to sustain its growth
and maximize shareholders value and that is what we expect all companies to do. We want the ZCCM-IH to take a center stage within the mining areas.”
The Minister also said ZCCM-IH had been identified as the anchor company to drive the National Gold Agenda for the country.
“ZCCM-IH has been identified as the anchor company to drive the National Gold Agenda for the Country. We remain optimistic that it will play a critical role in harnessing the gold potential for the benefit of this country. We believe that the formation of the ZCCM
Gold Company Limited in which government own 49% of shares through my Ministry will see more proactive participation in the investment to be undertaken throughout the gold value chain in the country. Government, through the Bank of Zambia, has identified the purchase of gold as one of the mechanism to harness the country’s International Reserves apart from other measures the Central Bank is currently undertaking. We believe that through the purchase of gold, the Central
Bank will be in a position to ensure that we have adequate reserves. We would also like to assure ZCCM-IH management of our support and hope to see
sustainable growth of the company and more dividends to come in future,” said Dr Ng’andu.
And ZCCM-IH chief executive officer Mabvuto Chipata pledged to continue paying dividends to government.
“I am happy to present the fourth dividends cheque to the Ministry of Finance for the financial year ended on March 31, 2019. In the last annual general meeting held on January 14, 2020, ZCCM-IH shareholders approved a total dividends payout of K53 million. As a group, we made a profit of K448 million which was largely driven by an increase of 155% in revenue. As a company, we remain focused on continuity to create value in our portfolio. In the year 2019 for instance, we increased our stake in Kariba Minerals and Copperbelt Energy
Corporation and invested in new companies such as Kabundu for manganese mining. Our strength raises in the mining sector as such, we will continue to play a strategic role in the growth of this sector,” said Chipata.