BY SHAME MAKOSHORI
ZIMBABWE’s industrial sector has appealed for a lifeline of up to US$100 million to recapitalise the State-run Industrial Development Corporation (IDC) and bolster its capacity to bail out struggling companies.
The IDC operates as an investment vehicle housing State interests in firms cutting across several economic sectors.
But sentiment towards re-engineering its operations has been growing with industry pointing out that it has failed to keep pace with emerging trends.
The industrial chamber wants the IDC to operate along the lines of the Industrial Development Corporation in South Africa, in order to give impetus to ongoing efforts to revive hundreds of firms that have collapsed due to economic mismanagement and corruption.
The South African IDC has been carrying out direct interventions in Zimbabwe, extending loans to vital institutions like Agribank.
On Tuesday, the Zimbabwe National Chamber of Commerce (ZNCC) said to carry out this mandate, the IDC should be recapitalised to the level of the minimum capital requirement for commercial banks.
The Reserve Bank of Zimbabwe has directed commercial banks to have a minimum capital of equivalent to that of commercial banks by December 2021.
“The IDC should be restructured to make it a development finance institution which supports industry instead of it remaining an investment vehicle as it is now,” the ZNCC said in a paper presented to government, spelling out its expectations in the 2021 budget.
“There is need to capacitate IDC by US$100 million, which is equal to the minimum capital requirements for large indigenous commercial banks and all foreign banks,” it said.
The chamber is convinced that once this is accomplished, the IDC will be well placed to intervene with cheaper funding to the country’s struggling industries.
Up to US$2 billion is required to power manufacturing sector firms to produce at full throttle.
The call comes as government is struggling to raise the $18 billion stimulus package announced by President Emmerson Mnangagwa in May to help companies ride out of COVID-19-induced shocks.
Industrialists say domestic banks are ill-equipped to bankroll companies due to liquidity stress in the financial system.
In its submission, ZNCC commended government for appointing new players to run the consignment-based conformity assessment programme.
“This was in line with our submissions, and we expect this to enhance efficiency. There is need for allocation of funds towards improving efficiency for border systems — modernise the infrastructure at ports of entry in line with changing global trends and business needs. There is need to digitise all Zimbabwe Revenue Authority operations at the borders, Zimra should move to paperless operations,” the ZNCC noted.
“There is need for an update from Zimra regarding the progress on implementing drones at borders as they have been promising for the last 24 months. There is also snail pace progress in implementing one-stop border posts across the entry points with the Beitbridge Border Post supposed to be the second to implement after Chirundu,” the paper said.