Finance minister Tendai Biti says his ministry would not administer the $40 million Distressed and Marginalised Areas Fund as that would be tantamount to carrying out quasi-fiscal activities.
Speaking at the launch of the fund in Bulawayo on Monday, Biti said the government does not have capacity and mechanisms to manage the fund.
“There has been debate about who will manage the funds. Our job in the ministry is to facilitate business by creating conditions that are conducive for business,” said Biti.
“We have refused temptations of us managing the funds, we do not have the mechanisms and as we do not want to create quasi-fiscal activities.”
CABS, a subsidiary of Old Mutual, would administer the funds which are set to be decentralised. “We don’t want to see a repeat of what has been happening with other funds where decisions are made in Harare only,” he said.
“CABS will be conveyer belt to other banking institutions and small banks with little capital should also participate in handling the facility. This will be strictly monitored.”
On Sunday, Zanu PF leadership in the Matabeleland appointed Mines and Mining Development minister Obert Mpofu to oversee the running of the funds. The party said it wanted to ensure the funds were distributed in a transparent manner.
In May this year, the government announced the setting up of the distressed fund under the “Let Bulawayo Survive” campaign to provide working capital to ailing companies in the city which suffered from financial marginalisation by local funders.
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Biti said the facility is a revolving fund which runs up to the end of each year, meaning that beginning next year additional resources would be made available from the 2012 Budget.
Biti said funds would be released at concessionary rates.
