Govt still to deliberate on how to disburse $40m fund

In a telephone interview, Industry and Commerce Minister Professor Welshman Ncube said a loan scheme run by CABS was not part of the Distressed Industries and Marginalised Areas Fund (DIMAF), which is meant for Bulawayo companies.
CABS, a DIMAF distributing agent, is inviting applications from companies outside Bulawayo to apply for funding to resuscitate their operations.

Last week Bulawayo business people met at the Zimbabwe National Chamber of Commerce (ZNCC) offices and expressed shock at the development.
They felt the fund has been hijacked and said the bank has introduced stringent requirements for applicants.
However, Prof Ncube professed ignorance about the issue and insisted that the fund for Bulawayo companies was still in the pipeline.

“I do not know anything about that funding. If there is such a thing it is not part of the task force. Whatever funding CABS might be administering now is not under the directive of Government,” said Prof Ncube, who also chairs the eight-member task force team on the “Let Bulawayo Survive Campaign”.
“The official position is that Cabinet is yet to discuss the rules to govern the disbursement of the US$40 million. Until Cabinet makes a decision on the issue it is still premature to discuss that.

“We were not able to discuss the issue last week because of the budget. However, it will be urgently looked into in our Cabinet meeting this week.”
Bulawayo companies have expressed frustration over the delays in the disbursement of the fund, which is expected to boost the city’s economy.
The disbursement of the fund has been surrounded with confusion with some saying it was not for Bulawayo alone.

Although Prof Ncube promised Bulawayo companies that they would access the fund before the end of this year, companies in the city have said the scenario was unlikely as there is still confusion on how it would be accessed.

ZNCC Bulawayo chairperson Mrs Ntombenhle Moyo is on record saying businesses in the city were no longer sure if the funding at CABS was the same one launched by Finance Minister Tendai Biti.
She said the bank was inviting applications throughout the country despite the fact that it was initially said to be specifically for Bulawayo.
Mrs Moyo said distressed companies in the city could not afford to meet the stringent conditions set by the bank and demanded that Government clarifies the issue.

She made reference to the bank’s list of conditions, one of which stated that beneficiaries must pay 1,5 percent of the value of their fixed assets to access the fund.
Another requirement was that businesses would pay 10 percent interest rate per annum, which businesses felt was too high.

The maximum loan that can be paid out is 70 percent of the value of the fixed assets, 50 percent of movables and 15 percent of stock and debtors.
Mrs Moyo said the majority of these companies have obsolete equipment, little or no stock and negligible movable properties.
This means the money they are entitled to would be too little for them to recapitalise and get back on their feet.

Last month, the Government announced the setting up of the US$40 million under DIMAF for recapitalisation of companies in Bulawayo.
The decision came in the wake of concerns over closure and relocation of the city’s companies which has left thousands unemployed.
In its 2012 budget last week, the Government availed an additional US$30 million for DIMAF..