eBusiness Weekly
Business Writer
The Zimbabwe Government has appointed seven banks to administer the US$30 million facility to be allocated to industry from the US$958 million Special Drawing Rights (SDRs) Zimbabwe received from the International Monetary Fund last year.
The US$958 million, which will be used over a three-year period, is part of the US$650 billion reserve assets (SDRs) the International Monetary Fund (IMF) disbursed to build confidence and foster resilience and stability in the global economy in the wake of the devastation caused by the Covid-19 pandemic.
Finance and Economic Development Deputy Minister, Clemence Chiduwa said: “While I would need to check progress regarding the disbursement of the SDRs facility to industry, seven banks have been appointed to administer the facility. I can’t also give you the names of the appointed banks off hand. ”
In the 2022 National Budget, Finance and Economic Development Minister Professor Mthuli Ncube, said the SDRs funds will be used prudently, with accountability and transparency to support projects in the social sectors such as health, education and the vulnerable groups, productive sector value chains, infrastructure investment and foreign currency reserves and contingency fund.
SDRs are not a currency, but an international reserve asset created by the IMF to supplement official reserves of member countries.
They can provide countries with liquidity.
Although Government’s allocation remains a drop in the ocean compared to what industry requires, economic commentators are on record saying the facility will go some way to support industry’s capacity issues.
Treasury said the US$30 million will be used to capitalise a revolving fund facility from which deserving companies can borrow to fund their working capital or retooling requirements.
The move shows the Government’s commitment to bailout local firms to get back on their feet following the devastating effects of the Covid-19 on the economy.
The Treasury has said the revolving facility is meant to improve the manufacturing sector’s contribution to the country’s Gross Domestic Product (GDP).
As part of the modalities to disburse the SDRs resources, the Government will provide guarantee or cover to a company that needs to borrow money from the bank while the appointed financial institutions would do the due diligence.
In a separate interview, CZI past president Mr Sifelani Jabangwe who is also the Cotton Company of Zimbabwe (Cottco) chairman said industry has started submitting their applications through the Ministry of Industry and Commerce.
“As Cottco, we have started applying for the funding under the US$30 million SDR facility, and we have been informed that companies should make their applications through the Ministry of Industry so that the ministry does the due diligence against each application.
“The nature of the projects to get the funding are those that seek to alleviate poverty while creating employment; companies with projects that are anchored on promoting local content as well as value addition are bound to secure the funding,” he said.
The Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Christopher Mugaga said they have not received any communication on application submissions as yet.
“To be frank with you, as ZNCC we have not yet received any communication regards the submission of applications for SDRs facility and we are not aware of any of our members that have made the application thus far,” he said.
Association for Business in Zimbabwe (ABUZ) chief executive officer Victor Nyoni echoed similar sentiments as Mugaga adding that in the past they have noted a “long” gap between announcement and implementation.
“Previously, we have seen Government coming up with funding facilities to help industry retool and the modalities for the disbursement of the resources from the facility have proved to be difficult for companies because of communication failure by banks that are appointed to administer the resources.
“As we speak, I don’t have an idea of when the applications will be made. We have noted that there is a long gap between pronouncement and implementation. It takes too long for companies to secure funding once the Government makes an announcement, by the time the resources are available, they would have been overtaken by events,” he said.
