What “IH” achieved in the 2 years of their “rebooted” strategic plan
Finance, ZCCM-Investment Holdings Plc

When a company decides to change its strategic direction, it can only mean one thing: They have seen opportunities that they believe their resources and capabilities can enable them to take advantage off.

ZCCM IH Board flanked by Ministry of Mines and IDC announcing the acquisition of Mopani

One can imagine that after two years of pursing a 5 year strategy from 2018, the investment analysts and strategists at ZCCM IH, performed a SWOT analysis of investment group which exposed the strengths that “IH” had coupled with the weakness that needed to be addressed. This was then combined with a thorough assessment of the opportunities that existed in the Mining Sector in the 2020 decade and beyond and the potential threats that could challenge the business.

The motivation is clear on why “IH” opted to have a clearly focused 6 year strategy. “The focus for ZCCM-IH in this new strategic plan is directed to mining and mining related investments, and emphasises the need for ZCCM-IH to drive the development and growth of the mining sector in Zambia”, according to the recently published in January 2021. One of the strategic management tool they used to arrive at this was the Boston Consulting Group’s Matrix (BCG Matrix).

The Boston Consulting Group (BCG) growth-share matrix is a planning tool that uses graphical representations of a company’s products and services in an effort to help the company decide what it should keep, sell, or invest more in.

Strategic thinking like this requires a known strategic track record. What is interesting is that while “IH” was implementing their previous 5-year strategy, in the two years they accomplished another of milestones.

Some of the milestones they achieved was a consistent dividend payout to shareholders, achieving a Portfolio Return above the set benchmark, increased shareholding in CEC Plc, diversification into Manganese exploration and mining through Kabundi Resources Ltd, increasing their stake to 100% shareholding in Kariba Minerals Limited, recapitalisation of Investrust Bank Plc through the injection of ZMW286 million as Tier 1 Capital, beginning the implementation of the mandate to develop the gold sub-sector in the country, commencement of discussions with their partners in the mining companies for the introduction of a more reliable and predictable revenue stream in form of royalties, metal streams and management fees and, implementation of a new performance management system.

With a track record such as the aforementioned, it is clear that the “IH” team is primed to execute on its mandate. That is because they also performed a PESTLE analysis. Evidence of this is in their strategy document. One of the historical challenges that “IH” suffered from was its “inability to realise full value from its investee companies in the mining sector – the traditional dividend model has not worked”, according to the strategy document. To remedy this, they propose “lobbying for change in policy and legal framework to support proposed alternative revenue streams”. This approach is logical as the mining legislation has been evolving over the last decade and if “IH” desires to increase alternative revenue streams such as Royalties, Mine Supply income, Management Fees etc, they will need to play a part of the crafting of legislation that will ensure a win for the group. This is an approach that has been adopted by many of the listed companies on the Lusaka Securities and Exchange as a means of protecting and preserving value.

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