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Zvamaida Murwira
Senior Reporter
FOREIGN currency loans from a US$22,5 million revolving fund for industry and commerce for retooling continue to be allocated by Government from the nearly US$1 billion that Zimbabwe received from the International Monetary Fund under its Special Drawing Rights disbursements during the Covid-19 emergency.
The money is being disbursed for retooling for new equipment and replacement for value chain and helps manufacturing companies facing foreign currency challenges and absence of lending at concessionary rates to buy new equipment and to replace old and obsolete equipment.
The latest development is to see a breakdown into sub-sectors.
The facility is also expected to help the country achieve its national goals that include attaining an upper middle class income economy by 2030 spawned by the Government’s economic blue print, National Development Strategy 1.
In a statement, the Ministry of Industry and Commerce said the US$22,3 million revolving fund facility was still functional and had since been aggregated into different economic sub-sectors.
“The Ministry of Industry and Commerce would like to advise that the US$22,5 Retooling for New Equipment and Replacement for Value Chain Revolving Fund is operational. The funds have been allocated to the following value chains: cotton US$5 million, leather US$5 million, pharmaceutical companies US$5 million, fertiliser US$4 million and other agro processing US$3,5 million,” said the statement. The Ministry said the fund will be accessed through participating banks and a company would need a supporting letter from the Ministry of Industry and Commerce for the application to be processed.
There are a number of areas of priority under the NDS 1 which will receive funding preference under the facility, particularly those with a significant multiplier effect on the economy such as processing of cotton, leather, soya, sugar, dairy value chains as well as fertilisers.
The revolving fund was allocated from the US$958 million Special Drawing Rights (SDRs) Zimbabwe received from the IMF last year, as part of the global lender’s US$650 billion global disbursement to cushion member countries from the negative impact of Covid-19.
Participating banks in Zimbabwe include FBC, Ecobank, BancABC, and POSB.
The IMF injected the record US$650 billion to build confidence and foster resilience and stability in the global economy in the wake of the lockdowns generated by Covid 19.
Zimbabwe’s manufacturing sector continues to increase owing to the Second Republic’s various intervention measures anchored on NDS1.
The Government also introduced the foreign currency auction system to allow companies in critical sectors to access cheap hard currency, a development that has helped to increase capacity utilisation for industry.
Retooling and replacement of equipment will also go a long way in saving foreign currency in importation of raw materials which will in turn be channelled to other areas.
Online Reporter