Essar to set up US$10m fund for SMEs

business operations and empowerment projects in Zimbabwe.
Mr Ravi Ruia, vice-chairman of Essar Group, the Indian parent firm of Essar Africa, announced this after signing a contract for the acquisition of a 54 percent stake in Zisco.
Essar Africa concluded the acquisition of the Government’s 60 percent stake in the State enterprise. The company will inject US$750 million to revive the Redcliff-based former parastatal..
Mr Ruia said they would provide the US$10 million to Small and Medium Enterprises, women and youth business projects as a demonstration of their commitment to Zimbabwe.
The SME sector would receive US$5 million from the facility with women and youth projects taking up the remainder.
Mr Ruia said the modalities for disbursing the resources to the beneficiaries were being worked out by the authorities.
“We are setting up two funds for the benefit of indigenous Zimbabweans,” he said.
“US$5 million will benefit young people and women. The other US$5 million is for the development of SMEs.
“We hope this will accelerate industrial development and help develop a new generation of SMEs,” he said.
He, however, called for fair and transparent disbursement of the funds to the deserving beneficiaries.
Out of the US$750 million that Essar plans to invest in Zisco Steel, part of the funds will go towards clearing debts while the balance will be invested in operations to revive the firm. Essar also pledged to invest in power to counter deficits and in rehabilitation of the rail system to ensure consistent and uninterrupted supply of coal from Hwange.
Under the Zisco acquisition deal, Essar will also inherit Zisco’s debt estimated at more than US$340 million.
The sale of Ziscosteel to Essar will lift the debt obligation from the financially incapacitated Government of Zimbabwe. Essar Africa has also committed itself to assist the Government clear US$22 million of Zisco’s salary related arrears.
Meanwhile, Ruia said Essar was considering investing in other sectors of the Zimbabwean economy.
“We hope this transaction (Zisco deal) will be a precursor to our investment in other areas of the economy,” he said.
Mr Ruia pointed out that Africa and Zimbabwe in particular, as emerging markets, offered vast opportunities.
Essar Africa Holdings is a subsidiary of the multinational conglomerate Essar Group which is a major player in the steel, oil, gas, power, communications, mining, shipping and logistics industries.