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The Ministry of Industry and Commerce has engaged mining companies and the Reserve Bank of Zimbabwe to explore ways in which the two could facilitate funding structures in order to help the domestic industry to re-tool.
Deputy Minister of Industry and Commerce Chiratidzo Mabuwa said that assistance was being sought from miners as they are large consumers of industrial output.
She said that the initiative is part of options being considered on where industry can get affordable funding facilities to help firms mechanize or retool.
“Over and above the demands in the mining sector, we are also discussing with the Ministry of Mines to say ‘you are expected to be a large consumer of the products from industry, but we need to have finances for retooling, can we not get a special fund from you’,” she said.
Deputy Minister Mabuwa also said her ministry is engaging the RBZ over a funding facility for companies with the multiplier effect on the value chain.
“Again from that angle, we are also engaged with the RBZ for them to look at setting aside a specific fund, where we are going to select those industries with a multiplier effect along the value chain and look at affording them finances for retooling,” the deputy industry minister said.
Local industry is operating at depressed capacity of around 34 percent largely due to the fact that they have no access to affordable lines of credit.
Most of the financing available from local banks is either short-term or prohibitively expensive, making it difficult for firms to borrow for retooling.
While Government’s distressed and marginalized areas fund helped some firms to rediscover their footing, the facility was too small to address most of individual companies or the entire industry’s funding needs.
This also comes at a time when Zimbabwe is receiving negligible amounts of foreign investment to replace or refurbish old factories destroyed by debilitating effect of more than a decade of economic instability.
As a consequence, failure to retool means local industry has become inefficient to the point that it cannot compete against foreign producers with lower priced imports preferred by customers to local products.
Estimates have in the past indicated that more than $2,5 billion is required to regenerate the country’s industrial base and introduce new technology.
Apart from using old machinery and outdated technology local industry’s competitiveness has been eroded by other factors such as high cost of utilities (energy, water and transport), high cost of labour, high and numerous taxes and poor infrastructure among a host of other factors.
Online Reporter