Only 2 out of 25 State Owned Enterprises – SOE’s declared dividends
ONLY 8% of State Owned Enterprises – SOEs declared dividends to government. This was contained in a report by Acting Auditor General Ron Mwambwa to President Lungu made publicly available to the Zambian Business Times – ZBT. The report revealed that out of the twenty-five (25) SOEs under the Industrial Development Corporation - IDC portfolio, in which IDC holds 60.7% to 100% shareholding,.....
ONLY 8% of State Owned Enterprises – SOEs declared dividends to government. This was contained in a report by Acting Auditor General Ron Mwambwa to President Lungu made publicly available to the Zambian Business Times – ZBT. The report revealed that out of the twenty-five (25) SOEs under the Industrial Development Corporation - IDC portfolio, in which IDC holds 60.7% to 100% shareholding, only two (2) namely - Mulungushi Village Complex Limited - ZMW200,000 and Indeni Petroleum Products Limited - ZMW7.4million declared dividends for the year 2016 in amounts totaling ZMW7.6million.
The 23 companies that have failed to deliver dividends are more of a drain to state coffers which include: Mulungushi Textiles Limited, Engineering Services Corporation - ESCO, Medical Stores Limited - MSL, Mpulungu Harbor Corporation Limited, Mupepetwe Engineering Company, Mukuba Hotel Limited, Lusaka South Multi-Facility Economic Zone Limited - LSMFZ, Nitrogen Chemicals of Zambia Limited -NCZ and NIEC School of Business Trust.
Others also making the shame list are ZCCM Investments Holdings – ZCCM -IH, Zambia Daily Mail, Times Print Pak Zambia Limited, ZESCO Limited, Zambia Forestry & Forest Industries Company, Zambia Educational Publishing House Limited - ZEPH, Zambia International Trade Fair - ZITF, Zambia Printing Company -ZPC, Zambia Railways -ZR, Zambia State Insurance Corporation Life Limited, Zambia State Insurance Corporation General Limited, Zamtel Limited, Zamcapital Enterprises and Mulungushi International Conference Centre.
Some of the companies that are on the list of SOE’s failing to declare dividends but operating in lucrative industries are companies such as ZESCO and Zamtel. For ZESCO is a monopoly and currently enjoys having a vertically integrated business across generation, transmission and distribution. The energy sector remains a very attractive industry not just in Zambia but across the region and globally.
Take Zamtel for instance, it’s peers and multinational local units like MTN and Airtel are making huge profits while the company continues to ask for more investments from the government instead of engaging banks as per normal business operations.
The two life and non-life units of the State Insurance Companies are also other units that are operative in a lucrative insurance market and yet fail to make profits let alone declare dividends to the treasury.
Listing is a potential solution to this anomaly. Listing some of these entities on the Lusaka Securities Exchange so that some level private interest comes in that will make these companies Chief Executive Officers - CEOs become accountable at Annual General meetings. The market forces on the stock market and rules required to maintain a company listing as well as transparency requirement will aid in putting public controls over and above the IDC and government controls.
The government should consider trimming its shareholding to say 51% and sell the 49% to Zambians to avoid taking the route of selling shareholding to foreign interests. We have now developed a good number of Zambians who are capable of taking stake in these companies and making them viable. Controls must be put in place that Zambians are not used as fronts for foreign interests in these transactions.
Photo: Zamtel having a tough time to deliver dividends in the lucrative Telecoms industry