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Michael Tome Business Reporter
Companies in industry and commerce have received a short in the arm after the Government last week launched a US$30 million revolving fund facility to drive retooling in industry and give impetus to the tourism sector in its recovery.
About US$22, 5 million of the funding package will be directed towards retooling in the value chains of the manufacturing industry while US$7,5 million will be extended to players in tourism to develop and upgrade their assets.
Companies in the agro-processing and fertiliser sectors would benefit from US$7,5 million earmarked for them under US$22,5 million kitty set aside for industry while the leather, cotton value chains, and pharmaceuticals will each get US$5 million.
Ten areas of priority under the NDS 1 will receive funding preference under the facilities, 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.
Players in the pharmaceutical, iron and steel as well as the transportation sectors, including bus and truck assembly, are also considered priority areas in terms of the NDS1.
The funding was allocated from the US$958 million Special Drawing Rights (SDRs) Zimbabwe received from the International Monetary Fund last year, as part of the global lender’s US$650 billion disbursement to cushion member countries from the negative impact of Covid-19.
The Treasury said the funding would be accessible through normal banking channels where eligible manufacturers, tourism players and other beneficiaries will be mandated to submit their requests to participating banks with the requisite information.
Some of the participating banks include FBC, Ecobank, BancABC, and POSB.
The financial institutions will conduct their normal credit assessments and due diligence to ensure transparency, but they have since been instructed to support the two sectors with favourable interest rates.
Speaking at the launch event, Finance and Economic Development Minister Professor Mthuli Ncube said the financing facilities stressed the fact that the two sectors were chosen in recognition of their quick multiplier effect on the economy.
It is expected that the funding will assist industry to retool in a development that should spur capacity utilisation, import substitution and create much employment as well as accelerate economic growth and development.
In terms of the tourism sector, Minister Ncube said the sector was a key export earner for the economy while globally the sector was renowned for creating quick jobs, hence the need to support the sector.
This falls under the tourism revival strategy, which seeks to grow the tourism receipts to US$5 billion within the next 3 years.
“Setting up of the retooling and equipment replacement fund will go a long way in supporting respective companies with foreign currency requirements towards retooling, development of value chains to increase production so as to feed into local and export markets.
“It was in the 2022 budget statement that I announced that Zimbabwe had been allocated US$958 million from the IMF, it is from these resources that the Treasury is targeting strategic sectors such as manufacturing and tourism value chains for the upgrade of equipment and facilities
“The funds have the potential to close the funding gap and spearhead increased beneficiation and as well finance bankable projects with a slant towards value addition,” said Minister Ncube.
Representing the participating banks FBC chief executive officer John Mushayavanhu said the funds should be treated with utmost respect, which should see companies moving away from the habit of not paying back Government-guaranteed loans.
He noted the funding will be allotted to worthy applicants from the two sectors.
“There is a tendency amongst Zimbabwean borrowers that when a facility is guaranteed by the Government, it is a freebie and they do not have to pay back. Unfortunately with regards to this facility as banks we are not going to allow that.
“I urge you not to treat this as a freebie, but a timely intervention by the government to help you upgrade your businesses.
“We will lend to deserving applicants in manufacturing and tourism, I have moved around and toured some factories and tourist facilities and I am sad to say that some of the equipment that we have seen in these factories is pretty archaic and needs replacement.
He indicated that there was a serious need for refurbishment of tourism facilities if the country was to realise its intended growth in tourism.
Secretary for Industry and Commerce Dr Mavis Sibanda said her segment was looking to revitalize some of the under-equipped areas in her constituency, particularly along the 10 chosen value chains.
“The revolving fund will go towards retooling, acquiring new equipment, and meeting the requirements of the priority value chains.
“We are looking at the leather cotton, and pharmaceuticals, fertiliser and rural industrial projects, we are happy to finally allocate the money because we had for long been inundated by questions as to when we were going to receive the money,” said Dr Gumbo.
Environment, Climate, Tourism, and Hospitality Industry Minister Mangaliso Ndlovu said the facility would assist companies in supporting the revitalization of the sector, which was hard hit by the Covid-19 pandemic.
“The facility will go a long way in helping our small to medium tourism players who have been adversely affected by Covid-19, jobs were lost, some industries were closed completely and we hope that this is the beginning of an interesting journey.
“From the tourism industry perspective it has been a long time coming, we had hoped to have this kind of facility even before Covid-19,” said Minister Mangaliso.
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