The Sunday Mail
Africa Moyo recently in BULAWAYO
FINANCIERS such as the African Export-Import Bank (Afreximbank), the African Development Bank (AfDB), the African Capacity Building Foundation (ACBF) and the United Nations Development Programme (UNDP) are ready to rescue local companies that have the potential to grow but are currently being affected by the obtaining illiquid environment, The Sunday Mail Business has learnt.
In particular, the Egypt-based Afreximbank is understood to be working on a resource envelope of between $50 million and $100 million for companies that are facing working capital shortages.
It has also been established that the AfDB is presently assessing the quantum of funds that “serious manufacturers” require to regain their footing.
Following the changeover from the Zimbabwe-dollar era to the multi-currency system in February 2009, most local firms either failed to access funds from local banks or got it at premium rates.
Most companies are currently battling mountains of debt.
The tour of local industries in Harare, Kwekwe, Gweru and Bulawayo that was organised by the Office of the President and Cabinet last month indicated that most small to medium scale enterprises (SMEs) are failing to meet their order book as they did not have the much-needed working capital.
For example, Leaford Electric Rewinds Limited in Bulawayo, which manufacturers electric transformers, is sitting on order book worth $80 000 because it does not have funds to buy raw materials. It requires more than $300 000 in working capital.
Also Gweru-based enterprises Dubs Investments and Ridgeway – contracted by Bata Shoe Company to stitch tennis and leather shoes as part of the company’s compliance to empowerment regulations – are facing the same challenges.
Furniture business Ndaftech Investments requires relatively lower capital, but it is struggling to get the funds.
This has compromised the company’s business model since it cannot supply its products on credit to businesses that are not able to pay cash.
The challenges are not peculiar to SMEs alone as big businesses such as Lobels Biscuits, which also requires $2,3 million in capital, is suffering as well.
Ambassador Mary Mubi, the senior principal director in the Department of Public Affairs and Knowledge Management in the Office of President and Cabinet and also head of the tour, said on the sidelines of last week’s tour that Afreximbank will organise finances for industry.
“We have the head of Afreximbank and he has been very positive. He was with us in Harare (recently) and was with us in Kwekwe, Gweru and now Bulawayo.
“So, we really need some of these regional banks and others to come and see what is on the ground. And I think once you see, there is no way in which you can fail to be excited about the opportunities available,” she said.
She added that the Diaspora funds can be harnessed to invest in some of the local projects.
Added Ambassador Mubi: “Yes, we are losing jobs in some areas but there are opportunities for creating new jobs.
“What CZI is focusing on now in terms of value chains is very important because we create opportunities for each other. We also need, as Zimbabweans, to say what is in our national interest?”
Afreximbank regional manager-Southern Africa Mr Gift Simwaka said last week the bank has resumed talks with Government for the establishment of the $50 million to $100 million fund.
“We had , three-and-half years ago, put a financing facility called the Zimbabwe Economic Revival Facility (Zetref) that has come to an end this year.
“I am discussing with authorities as we move from one place to the other. Maybe we have a successor facility that can meet financing requirements for these companies.
“I mean, it is so saddening to see such huge potential failing to take off because of $300 000. So what we will do is to work with the Government and put in place anything between US$50 million to US$100 million facility under which every company can come and access their requirements.
“It is pleasing to note that every company we have visited has orders they can’t fulfill and order financing is a very straightforward financing model,” explained Mr Simwaka.
He added that reactivating the fund will not take time.
Local banks will be used to distribute the facility.
Interest rates for the Zetref were largely viewed as prohibitive.
United Refineries Limited (URL) chief executive officer Mr Busisa Moyo, who is also president of the Confederation of Zimbabwe Industries (CZI), last week said URL was one of the companies that accessed Zetref at an interest rate of 36 percent.
The business suffered as a result.
Harare-based ACBF said it was prepared to provide technical support to some of the companies.
The Foundation’s senior knowledge management expert in Zimbabwe, Dr Robert Nantchouang, said there was a possibility of developing linkages between small-scale dairy farmers and the Kwekwe community to supply both milk and firewood, respectively, to Dendairy.
Similarly, UNDP national economist Mrs Ethel Bangwayo noted that there was scope to facilitate linkages between manufacturers, some rural communities and smaller companies.
“This is because part of our mandate is poverty reduction. For example, when Dendairy mentioned that mangoes are rotting in Honde Valley, for us that is something of interest because if we can work with the communities there, it helps upskill them in terms of preservation of those mangoes, whatever it is that Dendairy needs, we provide linkages and provide livelihoods.
“In fact, we would have also helped Dendairy because they will no longer have to import (the mangoes for making juice) and that will cut on costs,” said Mrs Bangwayo.
UNDP is currently working on a new country programme, 2016 to 2020, and has already liaised with the ministries of SMEs, Women’s Affairs and Youth, to appreciate what they are doing in various communities so that they can partner.
UNDP programmes are coordinated through Government.
African diplomats that took part in the tour include Namibia’s First Secretary Mr Sacky Shivute, DRC Ambassador Mr Mawampanga Mwanananga and Zambia Counsellor/ Deputy Head of Mission Mr Humphrey Mwenya Mushili.
Ambassador Surinder Datta of India, Third Secretary at the Chinese Embassy Mr Han Zhang and Malaysia’s Charge d’Affaires Mr Amarjit Sarjit Singh also took part.
