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Oliver Kazunga, Senior Business Reporter
GOVERNMENT has disbursed $2.5 billion to assist the productive sector and enhance winter wheat growing as part of measures to stabilise the economy against the adverse impact of Covid-19.
Finance and Economic Development Minister, Professor Mthuli Ncube, revealed this yesterday where he stated that defaulters and poor performers from previous support schemes would not benefit from the cushion funds.
Treasury has also released guidelines and modalities for accessing resources under the $18,02 billion Economic Recovery and Stimulus Package, which was recently announced by President Mnangagwa as a direct response to the economic impact caused by the deadly global pandemic.
In a statement, Prof Ncube said other than capital grants being disbursed through various line ministries, all productive support will be financed through banks with the Government providing the necessary guarantees.
“Implementation of the Economic Recovery and Stimulus Package has already started in earnest with the Reserve Bank of Zimbabwe having already disbursed ZWL$2,5 billion for the productive sectors and the winter wheat programme,” he said.
“Other than capital grants, which are being disbursed through various line ministries all productive sector support will be financed by banks through the normal banking channels with Government providing requisite guarantees to the financial institutions based on a risk sharing model.”
The productive sector facilities comprising agriculture sector support of $6,08 billion, working capital support ($3,02 billion), mining sector support ($1 billion) and tourism support fund ($500 million) will be accessed through the normal banking channels, said the minister.
“Applicants or intended beneficiaries should, therefore, submit their requests to their banks with the requisite information.
“Through the risk sharing model, banks will conduct credit assessment and due diligence of the applicants,” he said.
The minister explained that productive sector lending interest rates have been lowered to not more than 20 percent and existing qualifying loans must be restructured to allow businesses to recover. Loan restructuring will also entail review and relaxation of regulatory guidelines and benchmarks.
“Government will provide guarantees and banks are expected to monitor and evaluate the use of the resources by borrowers to ensure that the beneficiaries will repay the loans accessed,” said Prof Ncube.
He said that banking institutions using the Know Your Customer principle after conducting due diligence, are supposed to ensure beneficiaries adhere to the following conditions for accessing the resources.
The conditions for accessing the facility comprise a valid tax clearance certificate from the Zimbabwe Revenue Authority (Zimra) accompanied by record of tax compliance history; valid compliance certificate from the National Social Security Authority (NSSA); credit worthiness as assessed by banks while priority will be given to existing projects.
“New projects will be considered in the health sector if they result in the localisation of supply chains in the production of Personal Protective Equipment for the Covid-19 pandemic,” Prod Ncube.
For the tourism support fund, as part of the eligibility criteria, players in the tourism industry are also required to be registered with Zimbabwe Tourism Authority.
Prof Ncube indicated that defaulters and non-performers under previous facilities will not be eligible to benefit from the Economic Recovery and Stimulus Package, which is being rolled out.
Non eligibility also applies to funding for real estate, equity, illegal activities and speculative activities.
After accessing resources from the Economic Recovery and Stimulus Package, beneficiaries would be given a grace period up to three months to allow businesses to effectively recover from the effects of the Covid-19 pandemic.
Under the facility, Prof Ncube said the Reserve Bank of Zimbabwe will accommodate banks with liquidity needs as part of its lender of last resort function.
“These funds will be released to banks via a reduction on the statutory reserve requirements for banks,” he said. — @okazunga
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