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NewsDay

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Govt, Old Mutual working on Dimaf II

Business
GOVERNMENT in partnership with Old Mutual is in the process of crafting modalities for a successor to the fund meant to bail out distressed companies, a government official has said.

GOVERNMENT in partnership with Old Mutual is in the process of crafting modalities for a successor to the fund meant to bail out distressed companies, a government official has said.

BY TARISAI MANDIZHA

The fund will be a successor to the Distressed Marginalised Areas Fund (Dimaf) which was launched in 2011 to revive companies in Bulawayo, among others, with a kitty of $40 million. Government injected $10 million with the remainder coming from Old Mutual through its subsidiary CABS.

Speaking at the Institute of Chartered Accountants of Zimbabwe (ICAZ) judicial management, liquidation and curatorship seminar in Harare on Tuesday, acting deputy director in the Ministry of Industry and Commerce Percy Takavarasha said government and Old Mutual were working on Dimaf II that was expected to resuscitate more ailing companies in the country.

“We are also in the processes of working on Dimaf II, successor to Dimaf I. We are in the process of analysing the transaction and the modalities or the prescriptive model.

“We are also cognisant that Dimaf I had an envelope of $40 million and comparing that to the private sector credit levels, this was a drop in the ocean,” Takavarasha said.

He said the way to go was to create an enabling environment to attract more funding from the financial institutions as the Dimaf facility was short-term and not sustainable in the long-term. Takavarasha said government was working on a number of initiatives to resuscitate industry which includes Cotton Pricing Model, Cotton to Clothing Value Chain, Industrial Development Fund, Leather and Leather Product Strategy, and National Competitiveness Bill among others.

Since 2011, 48 companies, about half of them in Bulawayo, had received loans worth $28 million from Dimaf, former CABS managing director Kevin Terry said last year.

However, Dimaf continues to be a contentious issue with some companies in the designated areas complaining that access to the fund was almost impossible.

Previously, the minimum requirements for companies to qualify to access the funds included two years accounts in the form of management accounts or financial accounts, acceptable collateral, clean tax records, projections for capital expenditure loans, budgets and cash flows, among others.

Companies hardest hit by the economic challenges of the past decade were mainly located in Bulawayo, once the country’s industrial hub that employed thousands of people.

Over 90 companies have since 2009 closed shop in Bulawayo, leaving more than 20 000 workers jobless.