HomeNewsIndustry cries foul over lines of credit

Industry cries foul over lines of credit

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Industry bodies are crying foul over the inaccessibility of lines of credit unveiled by government to ease challenges affecting the manufacturing sector.

A number of facilities aimed at resuscitating the manufacturing sector have been availed since the adoption of the multi-currency regime but companies have found it difficult to access the funds.

The Zimbabwe National Chamber of Commerce (ZNCC) president Oswell Binha said industry was in dire need of funds and could not afford to have companies failing to access funds that have already been set aside.

He however, attributed the failure to access funds by companies to the premature announcement of facilities when there was still a lot of groundwork to be done before funds could be disbursed to deserving beneficiaries.

“The Botswana Bilateral Investment Promotion Protection Agreement (Bippa) was announced before the signing and a lot of administration work had to be done. Imagine how frustrating it is for companies that will have done all the necessary paperwork not to receive the money because of bureaucracy,” Binha said.

He said there was need to act quickly on credit facilities that would have been unveiled.

He said given the fluctuations of currencies, in particular between the United States Dollar and the South African rand, business will have to continually review their decision and this will be made worse by late disbursement of funds.

In 2010, government unveiled a $70 million Zimbabwe Economic Trade Revival facility (Zetref) aimed at offering credit facility to companies in the country that required capital injection and new equipment.

The government signed a Bilateral Investment
Promotion Protection Agreement (Bippa) with Botswana to avail $70 million to companies but there is still little progress on the funds.

With regards to the Zetref fund, Africa Export Import Bank (Afreximbank) contributed $50 million towards the facility while government committed $20 million from its International Monetary Fund (IMF) special drawing rights.

In his mid-term fiscal policy review Finance minister, Tendai Biti said only $13 million had so far been accessed by companies.

“Government will strive to remove bottlenecks and streamline bureaucratic requirements. It is anticipated that by the end of the year, over $70 million of the facility will have been disbursed to industry and commerce, requiring further replenishment,” Biti said.

Confederation of Zimbabwe Industries (CZI) president Joseph Kanyekanye said with regards to the Zetref funds, only two out of four banks tasked with providing funds were doing so.

Kanyekanye said the Bippa was signed in December last year but eight months down the line, nothing has materialised from it.

“We expected the funds to be availed within two months after the signing. We cannot wait for six months for Parliament to sit and ratify the Bippa. Government should act with speed because the interest rates have been announced and modalities for accessing have been done,” Kanyekanye said.

He said the delays in finalising the Botswana Bippa negatively impacted on the country’s image as assisting countries would assume that there was no urgency.

In Biti’s mid-term fiscal policy review government introduced the Distressed and Marginalised Areas Fund (Dimaf) of $40 million to help distressed companies in the country.

Average capacity utilisation in the manufacturing sector is ranging between 47-50% and it’s expected to rise to 56% by year end.

The manufacturing sector still requires capital injections to be competitive and there is need to open closed companies in Bulawayo and other cities in the country.

More than 80 closed shop in Bulawayo last year, leaving over 20 000 workers jobless owing to liquidity challenges forcing government to set up a seven-member ministerial taskforce to deal with the industrial problems.

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