The recent revelation by the ruling Patriotic Front (PF) government that it is seriously considering the prospect of establishing an Industrial Development Corporation (IDC), formerly known as INDECO, has been criticized.
A Zambian academic based in Colorado, America, Henry Kyambalesa, has argued that the creation of IDC will put Zambia at odds with the International Monetary Fund (IMF), the World Bank, and Zambia’s development partners which have worked so hard in bolstering the country’s efforts at meeting the development needs of the country since 1991.
Kyambalesa said the move is disconcerting, especially to people like him who witnessed the rampant shortages of commodities, smuggling and stunted economic growth associated with socialist policies during first republican president Kenneth Kaunda’s era.
“What is really the new rationale for resurrecting the defunct INDECO – an omnibus monopoly that played a significant role in driving our country from a potentially wealthy nation to a nation saddled with unprecedented socio-economic malaise? And do we really need to create such an enormous consumer of our beloved country’s meager foreign exchange reserves,”
Kyambalesa said Thursday in a statement.
“Article 112(b) of the current Constitution – the 1996 Republican constitution – gives us guidance on this matter; it asserts that “the State shall endeavour to create an economic environment which shall encourage individual initiative and self-reliance among the people and promote private investment.”
In addition to this proviso, a Clause proclaiming that “the State shall not nationalize or expropriate private property” should have been enshrined in the Republican constitution to ensure that investors know without a shadow of a doubt what the country’s stance on local and foreign investment is,” he stated.
According to Kyambalesa, what the country needs now is the creation of what may be referred to as a “social welfare state” which he said is a dynamic free-market economy that has a human face; or, more precisely, a socio-economic setting that simultaneously provides for a highly competitive business system and an effective mechanism for re-distributing wealth to the needy.
President Michael Sata on Wednesday said the IDC will be a tool for the modernization and diversification of the economy in order to create jobs, wealth and prosperity for the Zambian people.
The Head of State said the state will, through the IDC, maximize the value of government assets by establishing a sovereign wealth fund which will focus on stimulating investment in strategic non-mining industries among others, thereby expanding the country’s investment portfolio and thus creating jobs.
“The establishment of the IDC shall also boost the contribution of State-Owned Enterprises (SOEs) to national development by placing them under one umbrella holding entity to deepen their reform, enhance efficiency and maximize returns,” President Sata stated.
Defending government’s decision, President Sata said the IDC is government’s strategy to enhance domestic capital formation, wealth creation and preservation by focusing on exploiting the country’s advantages in natural resources and actively developing industries and enterprises to create jobs for the people.