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Minister Bimha

Oliver Kazunga Senior Business Reporter
AILING companies that have failed to meet requirements to access funding under the Distresses Industries and Marginalised Areas Fund (Dimaf) will be relieved amid indications that Old Mutual has agreed to relax conditions.
Following, the liquidity challenges being faced by companies to recapitalise, the government and CABS set up Dimaf whose resources are disbursed through CABS and administered by Old Mutual to bail out the firms.

However, due to stringent conditions that CABS has attached, ailing firms have failed to access funding from the facility.
Last week, Industry and Commerce Minister Mike Bimha said government has engaged CABS  to consider relaxing some of the terms that were deterring firms from accessing the funds.

“We have engaged Old Mutual or CABS to consider relaxing some of the terms of Dimaf and they have agreed; that is the starting point,” said Bimha, addressing a Parliamentary Portfolio Committee on Trade and Industry.

Some of the conditions that have stalled efforts by struggling companies from accessing resources from Dimaf include high collateral and published audited financial statements for the past five years.

He said government and CABS were both supposed to commit $20 million each to Dimaf.
“But while Old Mutual contributed $20 million to the Dimaf facility, government has failed to honour its pledge thus Old Mutual has contributed in excess of its pledge putting in $27 million to date,” said Bimha.

He said in terms of the disbursements all the $27 million had already been drawn-down with 48 companies benefiting.
Bulawayo, which has in recent years been hardest hit by de-industrialisation is said to have seen 26 firms benefiting from the facility while 22 other companies were said to be from other provinces.

An economic commentator Charles Chiponda said: “It is a quite welcome idea that CABS has agreed to relax some of the conditions of Dimaf so that ailing industries can access funding.  It is important that banks have to come up with borrowing terms that are flexible. The private sector should spearhead development with government on the other hand focusing on crafting policies that are favourable to attract investors.”

The tight liquidity situation in the economy has seen firms mainly in the manufacturing sector struggling to access working capital critical to stimulate productivity to competitive levels.

A report compiled by the Confederation of Zimbabwe Industries (CZI) has shown that capacity utilisation in the manufacturing sector last year dropped to 39,6 percent from about 44,6 percent the previous year.

CZI attributed depressed capacity utilisation levels to factors that include liquidity crunch in the economy, intermittent power supplies, and obsolete machinery.