Zimpapers Logo

The major thrust in turning around the Zimbabwean economy is to revive the ailing industries in our cities and towns. Most industries are operating way below capacity while in some cases some companies have completely shut down as a result of the economic meltdown experienced in the last decade.
Illegal sanctions imposed on the country by the West as punishment for embarking on the land reform programme meant to correct the skewed land ownership, are largely to blame for the economic challenges facing the country. Bulawayo which used to be the country’s industrial hub, was the worst affected with an estimated 100 firms forced to close, rendering about 20,000 workers jobless.

The government in a bid to revive the industries has come up with a number of funding packages such as the Distressed Industries and Marginalised Areas Fund (Dimaf). Lack of working capital and obsolete equipment have been identified as the major stumbling block to efforts to revive the country’s industries.

It is because of this realisation that government, working with some financial institutions, has come up with funding packages. The unfortunate development is that most of the companies are in a terrible state and as such cannot meet the normal funding requirements.

The obtaining environment therefore calls for extraordinary measures to enable companies to access funding. It is imperative for the government and the financial institutions to waive some of the funding requirements if companies are to access this vital funding.

It serves no purpose to avail funding packages that cannot be accessed by the intended beneficiaries. It is very disturbing to learn that while most ailing companies are in dire need of funding, about $700 million secured for offshore lending to local companies is lying idle.

According to the Reserve Bank of Zimbabwe, companies have utilised a marginal $7,9 million of the approved loans as of April this year with many companies blaming the slow uptake of loans to subdued economic performance. The central bank says many companies are failing to meet the conditions to access the loans hence the slow uptake.

The few companies that meet the stringent loan conditions are unfortunately reluctant to take the loans because of high interest rates. Many of these ailing companies realise that they will not be able to service the loans given that many of them are operating way below their capacity.

We want at this juncture to implore the central bank to come up with measures that will make these loans affordable and accessible to the majority of companies. Some banks are reported to be accessing the money on behalf of the companies but most of these banks are charging about 20 percent interest rate per annum which in our view is too high.

The manufacturing sector requires about $8 billion working capital but as long as companies cannot access facilities such as offshore funds, reviving the country’s industries will remain a pipe dream. We want to, once again, call on the RBZ and banks to work out mechanisms to enable as many companies as possible to access loans to replace antiquated machinery as well as provide working capital.