Trade facility delays disbursement

to be disbursed.
Zetref, a facility organised by the Government and the Africa Export and Import Bank, was launched at a time when most corporates were desperate for money and industry is yet to benefit, seven months down the line.
Recently, Industry and Commerce Minister Welshman Ncube announced that banks were ready to do so. However, indications are that not a single cent has been disbursed which is worrying given the immediate requirement for money by industry.
Since the introduction of the multiple currency system, the country’s private sector has failed to secure funding to recapitalise operations, making this facility one of the biggest revival packages to date.
After it was launched, it looked like the money would be disbursed before the close of last year but it has dragged into the second half of the year.
There has been an outcry from industry that the money should be disbursed with speed to avert the liquidity crisis that companies are facing. The biting liquidity challenge cuts across all sectors, big and small companies, listed and unlisted.
Some of these companies are at risk of collapsing if the disbursement of cash that is available continues to drag on.
The beauty of ZETREF is that it comes with a reasonable interest with longer term maturities, which is what industry requires for it to return to full production levels and thereby contribute to accelerated economic and trade growth as well as generate employment opportunities.
The loan facility finances the acquisition of equipment and capital goods for use in enhancing output, quality of goods, services, the purchase of raw materials and spare parts.
Besides ZETREF, industry is also waiting for the disbursement of the US$70 million Botswana loan facility that would be biased towards the manufacturing sector. The facility also seems to be taking time to reach industry.
As the facility delays, private sector has again resorted to short-term borrowing from local financial institutions, which charge exorbitant interest charges of more that 25 percent.
If these facilities were readily available, companies would cushion themselves from these market distortions.
ZETREF, together with other lines of credit coming into the country through various financial institutions, is anticipated to push capacity utilisation to about 80 percent.
Announcing ZETREF, Finance Minister Tendai Biti said the fund with an initial draw- down of US$70 million would be biased towards small to medium enterprises.
If this money is exhausted, Government has already indicated that there is room to negotiate with other financiers, regionally and internationally to finance the private sector.
Despite calls to action the disbursement of funds, the private sector is happy on the stance taken by Government that felt compelled to explore avenues aimed at facilitating the resuscitation of the private sector by way of securing injections of fresh working and medium to long- term capital.
Lack of capital has been identified as one of the major structural bottlenecks currently bedevilling the country’s economy and ZETREF is one of the efforts to turn around the fortunes the productive sectors.
It has been difficult for the country to access funding due to the country’s deteriorating creditworthiness over the previous years.
Afreximbank is one of the regional financiers, which has continued to support Zimbabwe despite the country’s deteriorating creditworthiness.
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