The Sunday Mail
CABS, which is administering the Distressed Industries and Marginalised Areas Fund (Dimaf), has to date extended more than US$28,7 million to companies, while an additional US$2 million is ready for disbursement, the lender said last week. The funds are mainly directed at companies whose linkages with downstream activities have the potential of broadening economic growth. Industry representatives in Bulawayo believe that companies in the country’s second-largest city require between US$100 million and US$150 million for retooling and rehabilitating operations.
Following a decade-long sanctions-induced economic downturn, production in local industries declined sharply forcing companies to scale-down operations and cut jobs. The economic challenges resulted in Bulawayo being transformed from an industrial hub to an industrial “scrap yard”. To address this, Government and Old Mutual introduced Dimaf in 2010 to recapitalise companies and boost production. The two parties were expected to contribute US$20 million each to the fund.
Of the companies that have benefited from the fund, 26 are from Bulawayo.
CABS marketing executive Ms Matilda Nyathi said last week the US$2 million kitty would only be availed to companies with the capacity to recover after the cash injection. The directors of prospective beneficiaries must have clean tax records and a sound credit standing, showing willingness and ability to repay.
An interest rate of 10 percent per annum is charged, plus an arrangement fee of one percent of the principal amount. The loan is payable within 12 to 36 months. “The uptake has been good based on the amount disbursed so far against the amount approved. We are still receiving applications for consideration.
“Repayments have been generally good. However, we also have instances where the companies are struggling to meet their repayment obligations.
“In such cases, we try and work with the companies in the spirit of ensuring we achieve the objectives of Dimaf. We encourage borrowers to repay amounts accessed from the fund,” said Ms Nyathi.
Confederation of Zimbabwe Industries Matabeleland chamber president Mr Busisa Moyo said the funding requirements for Bulawayo were huge.
“To meet retooling needs of industry, as from our studies, industry requires US$100 million to US$150 million in Bulawayo to bring equipment and plant up to date and working capital for expansion,” he said. Local industries are bearing the brunt of an illiquid market, competition from imports, erratic water and power supply, obsolete equipment and low FDI.
In his 2015 Monetary Policy Statement, Reserve Bank of Zimbabwe Governor Dr John Mangudya expressed Government’s commitment to addressing industry challenges.
“To this end, the Reserve Bank shall during the course of the year, assist in mobilising resources for expanding and restructuring the Distressed Industries and Marginalised Areas Fund to cater for the medium finance requirements of the manufacturing sector,” he said.
