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Nqobile Bhebhe, Senior Business Reporter
THE $289,5 million loan facility by the Industrial Development Corporation of Zimbabwe (IDCZ) has helped ramp up capacity utilisation of several key companies who have now increased employment creation and boosted their re-tooling projects.

Due to enhanced capacity utilisation, some of the beneficiary firms have started reducing the cost of their products, according to a recent Parliamentary report.

Already the manufacturing sector capacity utilisation had risen to 66 percent in the fourth quarter of 2021 from 47 percent at the beginning of the year as local companies continued to consolidate domestic market share, ZimStat records show.

The jump in capacity utilisation confirms the country’s manufacturing sector is on a rebound mode, and is responding positively to the Second Republic’s economic reform agenda.

According to the Parliament report issued this week, a total of $224 million was disbursed to 15 companies as of 31 October 2021 and out of these, six managed to pay off their loan obligations while the remainder were still running.

Some of the beneficiary companies include Radar Investments, which received Z$20 million, Sable Chemicals (Z$20 million), Olivine Industries (Z$5 million) and Chemplex Corporation received Z$170 million.

The Parliamentary Portfolio Committee on Industry and Commerce tabled the report on Tuesday where it stated that the advanced loans were used for the intended purposes and contributed to increased capacity utilisation and employment creation.

At Radar Investments, which operates two brick-making plants in Bulawayo capacity utilisation jumped from 40 percent to 80 percent, it said.

The firm was granted Z$20 million loan funding for the purchase of raw materials and for working capital to enhance capacity and efficiencies in the construction value chain.

Of the total granted, Z$10 million was set aside for plant and equipment for its Willsgrove Brick Factory, Z$5 million for the purchase of raw materials and Z$5 million for working capital.

“As a result of the upgrading of the plant and equipment at Willsgrove, the company has a combined annual output of 100 million bricks per annum,” reads part of the report.

“Prior to accessing the loan, the company was operating at 40 percent capacity due to financial constraints. However, at the time of the visit it was operating at +/-80 percent capacity due to the positive impact of the loan received from IDCZ,” said the Parliamentary committee.

The report further notes that the introduction of new technology at the new Willsgrove plant resulted in low production cost, which was being cascaded down to the customers through reduced prices by three percent per pallet of bricks.

“The company, directly and indirectly, created employment for +/-300 people. This is through direct and downstream employment in transport, packaging and other plant spares cluster industries,” reads the report.

The Z$20 million loan granted to Sable Chemicals to procure ammonia gas, a key raw material in the manufacture of Ammonium Nitrate fertilisers steered capacity utilisation from 15 percent in 2020 to 80 percent in 2021.

It also contributed to downstream employment in the agricultural sector, import substitution as well as foreign currency savings, noted the report.

Chemplex Animal and Public Health (CAPH) capacity utilisation increased by five percent from 25 percent.
However, the committee said there was a need to adequately fund the Industrial Development Fund to contribute substantially to the re-industrialisation agenda.

It said erratic disbursement of the Industrial Fund by the Treasury affects the planned projects of beneficiaries as the money loses value through inflation due to prolonged periods between the date of approval of the loan and the date of disbursement.

The fund targets corporates who are either existing or new and are into manufacturing and value-adding activities across the country.

Funding priority is given to those who can exploit the local currency to export or have the potential to do so or to import substitutes.

The IDCZ is a wholly-owned Government entity whose mandate is to establish and conduct new industries and industrial undertakings.

The corporation is allocated funds through the National Budget under Programme 2 of the Ministry of Industry and Commerce’s Budget known as the Industrialisation programme.

The Corporation commenced lending activities in 2019, after receiving seed capital from the Government as its sole shareholder. – @nqobilebhebhe