eBusiness Weekly
Business Writer
The Government is set to launch US$15 million revolving fund next week for retooling the industry and to help the tourism sector recover from the devastating effects of the Covid-19 pandemic, Deputy Minister of Finance and Economic Development Clemence Chiduwa told Business Weekly on Wednesday.
The funds are drawn from the Special Drawing Rights (SDR) Zimbabwe got from the International Monetary Funds (IMF) meant to help global economies recover from Covid-19.
SDRs are reserve assets issued by the IMF, backed by dollars, euros, yen, sterling and yuan. Zimbabwe received the equivalent of US$961 million SDR, part of the US$650 billion the IMF distributed to its members.
The IMF’s largest-ever distribution of monetary reserves was meant to provide additional liquidity for the global economy, supplementing member countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt.
The Treasury said the funds would be channelled towards supporting industries such as tourism, manufacturing, horticulture, mining, the development of irrigation systems and the establishment of gold processing centres.
The Government will not physically distribute its SDRs, but guarantee reasonably priced US dollar loans.
“We submitted the concept note on how the facility would work and we are hoping to get the input from the industry this week and the launch is set for next week,” said Chiduwa.
Industry and Commerce secretary, Dr Sibanda, told Business Weekly that the industry had come up with an agreed position on areas where the funds would be deployed.
“We have been promised the funds way back and we are waiting for the disbursements,” said Sibanda.
The launch comes a month after the Government unveiled the US$30 million revolving facility to support the horticulture industry.
The local industry is in need of funding to retool following several years of investment drought. The retooling will help local companies to be efficient and more competitive in light of the growing regional and global competition, analysts say.
According to the Confederation of Zimbabwe (CZI), Zimbabwe requires at least US$2 billion to retool and achieve optimal operational efficiency. The manufacturing sector has been the largest beneficiary of foreign currency auction allotments.
In eight months to August this year, the bulk of the auction allotments (71 percent) was for the payment for raw materials (US$42,1 million) and machinery and equipment (US$22,3 million), according to the latest figures from the Reserve Bank of Zimbabwe.
However, local companies have complained about not getting enough foreign currency and delays in disbursements. The tourism industry also requires fresh capital to help it recover from Covid-19. According to some tourism players, the industry requires as much as US$100 million, in the form of grants for recapitalisation.
“We need grants rather than loans or guarantees,” Dr Emmanuel Fundira, the chairman of Safari Operators Association of Zimbabwe, said in one of the interviews with Business Weekly.
“Grant funding is badly required to kick-start the sector.
“I would like to see US$100 million made available for grants in the tourism…it can be aggregated through concessionary waivers on leases and statutory dues,” said Fundira.
“Besides, tourism is not an industry in which one could flip a switch to the ‘on’ position. It needs a long ‘run-up’ support until it starts turning over revenue.”
