Category: Mines

Zambia Industrial and Mining Corporation Ltd.

Lusaka

 

The Zambia Industrial and Mining Corporation Ltd. (ZIMCO), a holding company for all Zambian state interests, is one of the largest concerns in sub-Saharan Africa. It controls 125 principal companies relating to every major industrial activity in Zambia, including mining, consumer goods manufacturing, finance, transportation, agriculture, energy, and hoteliery.

Created through a batch of reforms in 1969 to extend state interests into the giant copper mining industry, ZIMCO was incorporated in 1970. It was also designed to minimalise political interference in the running of state-owned businesses by serving as a buffer between the government and its investments. In reality, government officials exercised direct control over Zimco, which was a company on paper only and had no executive management. Managers of sub-holding companies reported directly to the relevant government ministries, which in turn reported to President Kaunda, who retained the title of chairman.

Zimco faced problems almost from the start. Its genesis marked the end of the high world copper prices that had characterized the 1960s. In the financial year 1971 to 1972, prices fell drastically. The decline that began in 1971 was to dominate the next two decades signalled economic ruin for the nation.

During this period, Zimco went through a metamorphosis. In 1978, in an attempt to streamline Zimco, Kaunda abolished all the sub-holding companies other than the Industrial Development Corporation of Zambia Ltd (INDECO) and the National Import and Export Corporation Limited.

Amid one of many economic stabilization programs launched under the advice of the International Monetary Fund, Kaunda for the first time gave the company a full-time board of directors, with former government minister Jameson Mapoma appointed director general. Kaunda, who remained chairman, filled Zimco’s ranks with civil servants and trade unionists. Over the years, Zimco’s management positions continued to be filled by political appointees, a feature that was later to bring the company under attack.

The depressed copper prices of the 1980s, and the resulting economic chaos, led to further changes. In the early 1980s, in one of several austerity programs, Zimco sold off its smaller companies to private interests. In 1986, after six years of mining copper at a loss, Zimco began to lay off employees. By March 1988, thousands of jobs had been lost.

All the while, Zimco ostensibly attempted to diversify its interests and reduce its dependence on copper. Kaunda targeted agriculture early on as one of the primary areas in which Zimco was to expand. Zimco ventures into agriculture had yielded poor results. Export restrictions, price controls, inadequate financing and recurrent drought constrained its tea processing and packaging plants, and its farms, dairies, and ranches, all of which consistently operated at a loss.

As it had done with manufacturing, in the late 1980s Zimco sought foreign investment to stimulate growth. Partnerships with several European nations—coupled with the relaxation of state restrictions and controls –  fostered a turnaround. Increased productivity helped Zambia meet its food requirements for the first time in 1989.

 

The latter part of the 1980s brought other encouraging signs for Zimco. In mid-1987, copper prices began to rise again and hit a record high in 1988. For the first time since it was formed, the company announced a dividend for that financial year. In the following year, the company showed a record net profit. The good news was not to last. Copper prices took a further downward turn in 1991.

In May 1990, Kaunda announced plans to set up a stock market in Zambia, on which up to 49% of shares in Zimco would be sold to private interests. Three months later, a parliamentary committee looking into Zimco’s affairs resolved that Kaunda’s proposal had not gone far enough. Lambasting the company for inefficiency and top-heavy management, and saying that it was a company that did not produce anything, had no relevant function, and was an unneccessary drain on resources, the committee called for its dissolution.  The outcome of these recommendations is unclear. Zimco is still in existence, its partial privatization waiting for the establishment of a Zambian stock market.

Reference

• Encyclopedia.com

Contributors

• James Gavin