US$80 million boost for productive sector Professor Mthuli Ncube

Bongani Ndlovu, Chronicle Reporter 

TREASURY has unveiled a US$80 million productive sector funding package secured under the International Monetary Fund (IMF) Special Drawing Rights (SDRs) and is inviting local businesses to start accessing the money.

Zimbabwe has started drawing down its allocation of SDR677 million (US$958 million equivalent) by the IMF, which is part of the SDR’s General allocation of US$650 billion that was released last year to all IMF member countries. 

While SDRs are not a currency, they are a critical international reserve asset created by the IMF to supplement the official reserves of member countries to provide liquidity.

The SDRs were meant to address the long-term global needs for reserves, building confidence and fostering resilience and stability while enabling member countries to cope with the adverse impact of the Covid-19-induced crisis.

In line with the country’s drive to transform the economy into a middle-income status by 2030, the Government directed that the funds be used prudently, with accountability and transparency to support key economic projects.

The project focus covers social sectors such as health, education, vulnerable groups, production sector value chains, infrastructure investments, foreign currency reserves and contingency fund.

Finance and Economic Development Minister, Professor Mthuli Ncube, unveiled the modalities for accessing the funding injection in a statement published in mainstream media yesterday where he called on producers to fully utilise the package. 

He said the breakdown of SDR disbursements towards the productive sector includes; a US$30 million horticulture revolving fund, US$22,5 million industry retooling for value chain revolving fund, US$7,5 million tourism facilities services development and upgrading revolving fund and the US$20 million smallholder farmers irrigation infrastructure development fund.

Professor Ncube said the funding from the launched facilities were being accessed through participating banks with businesses being urged to immediately submit their applications. 

“The respective bank shall conduct their normal credit assessments and due diligence through the risk sharing and co-financing model. The application from the bank should include a letter of support for the project from the line ministry,” said Minister Ncube.

He said the banks will forward the approved applications to Treasury through the respective line ministry depending on the fund from which the 80 percent cash cover Government guarantee is being sought.

“Through the External and Domestic Debt Committee, Treasury will appraise the applications and approve those that meet the conditions outlined in the framework for evaluating, monitoring and managing the guaranteed loans.”

Prof Ncube urged all applications to familiarise themselves with the requirements of the framework and  said timeline for the approval of the applications of the launched facilities will be 10 working days.

“If the application is in full compliance with the requirements of the framework for evaluating, monitoring and managing guaranteed and in-lent loans and in the case of default, the guarantee can only be called after the bank has exhausted all possible means of recovery,” he said. 

Minister Ncube said the US$30 million horticulture revolving fund was expected to go a long way in empowering farmers to start horticulture projects as well as acquire value addition facilities that will enable dehydrating, freezing, canning, bottling, extracting, juicing and concentrating their produce. 

Minister Mthuli Ncube with the budget briefcase

“The horticulture Fund can be accessed through the following banks, FBC Bank, CBZ, NMB Bank, CABS Bank and the AFC Land and Development Bank.

“The US$22,5 million industry retooling for new equipment replacement for the value chain revolving fund, will support companies with their foreign currency requirements geared towards retooling and investment in value chains to increase production for both local and export markets,” said Professor Ncube. 

The funds have been allocated to the following value chain; US$5 million for cotton, leather and pharmaceutical companies, US$4 million for fertiliser and US$3,5 million for other agro-processing.”

Prof Ncube said the US$7,5 million tourism package was meant to aid resuscitation of companies in the tourism sector, which were affected by Covid-19 pandemic, which crippled many enterprises.

“This package will be accessed through CBZ and Nedbank,” he said .

Minister Ncube said the US$20 million smallholder farmers irrigation infrastructure development fund  will be disbursed through the National Budget starting January 2023 to the identified 18 smallholder irrigation schemes covering 2 854 hectares, with about 5 708 households set to benefit from the fund. “The initiative will go a long way in enhancing climate-proofing agricultural production for the vulnerable and ensuring food and nutrition security,” he said. 

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