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The World Bank has recommended removing Zambia’s President from the Industrial Development Corporation (IDC) Board, citing concerns that his role compromises the governance and ownership policies of State-Owned Enterprises (SOEs).
In its Finance Review report, launched on Monday at Lusaka’s Mulungushi International Conference Centre, the World Bank attributed inefficiency, corruption and mismanagement within SOEs to the President’s presence on the board.
The report emphasized that depoliticizing the IDC would better align the corporation with Zambia’s economic objectives, enhance transparency and boost investor confidence.
The World Bank stated that this change would demonstrate a commitment to professional governance, mitigating conflicts of interest and political interference.
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“By removing the President from the IDC Board, the institution can focus on strategic decision-making and prudent investment practices,” the report noted, adding that this would strengthen the IDC’s credibility both locally and internationally.
The report also recommended periodic assessments of the rationale behind state ownership of enterprises, considering the financial constraints and market impacts that could arise from SOE involvement.
Additionally, the World Bank criticized the non-competitive process for appointing board directors in Zambia, highlighting a lack of criteria based on skills, experience, or independence.
Political connections, rather than merit, were often the basis for appointments, raising concerns about political interference in SOE management.
“A prime example is the President’s legal mandate to chair the IDC Board, which raises concerns over political influence in decision-making and appointments,” the report stated.
It warned that this lack of independence had serious implications for SOE management, where political priorities often override the long-term sustainability and profitability of enterprises.
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