via Govt fails to fund Dimaf – DailyNews Live 4 July 2014 by Kudzai Chawafambira
HARARE – Government has failed to provide the $20 million it pledged towards the Distressed and Marginalised Areas Fund (Dimaf), compelling hard-pressed industries to rely on private sector funding.
Under the $40 million Fund, established in 2011, government was supposed to provide $20 million while Old Mutual’s CABS would avail the balance.
On Wednesday, Industry minister Mike Bimha told Parliament that out of the $40 million pledged under the government and private sector partnership, to date only CABS had provided funds amounting to $27 million, $7 million more than their offer.
Dimaf is a revolving facility created to provide financial bail-out to struggling companies outside Harare, particularly those in Bulawayo — Zimbabwe’s second largest city.
“Government was supposed to put $20 million. Old Mutual honoured its obligation and put in the $20 million.
“Government, unfortunately, did not honour its obligation up to date. So, only $20 million was available and it was a drop in the ocean, even $40 million for that matter,” Bimha said, adding that “it was a bad beginning”.
He said because of the inclusive nature of the then government, there were disagreements as to who was supposed to administer Dimaf, but eventually it was agreed that CABS take up the task.
Bimha, however, noted that conditions set by the building society were too tough to meet as ailing companies were asked to present, among other requirements, audited accounts for five years and collateral.
“These are ailing companies, how then do you prove that you are going to pay when you are already dead?” he queried.
He said the CABS funds were disbursed to 48 companies, 26 of which were in Bulawayo with the rest shared among other provinces.
Going forward, Bimha said they have engaged the Finance ministry to consider numerous strategies to address the issue of funding distressed industries.
He said CABS had since agreed to relax regulations for struggling companies to improve access to Dimaf.
“We have engaged Old Mutual to consider relaxing some of the terms of the current conditions and they have agreed. So that is the starting point,” he said.
He added that government was also considering strategies to enlarge the fund by approaching other financial institutions within and outside the country.
“We are also discussing with Comesa (Common Market for Eastern and Southern Africa) who would want to put up a regional facility with the participation of regional players such as PTA (Bank) and others, with a view of assisting companies,” Bimha said.
He said while he was attending the African Caribbean Pacific-European Union meeting in Nairobi, Kenya last week, he was informed that the European Union Investment Bank (EIB) was now prepared to consider funding the private sector in the country and would send a team to make an assessment following a visit two weeks ago.
Local industry requires an estimated $2 billion for retooling and working capital to boost its competitiveness.
Most Zimbabwean firms are struggling to survive due to antiquated machinery, erratic power supplies, high finance costs and stiff competition from cheaper imports.
COMMENTS
Why are we not surprised? Govt relying on the private sector and the evil west to pay its promises!
We know that our inability to borrow money from the banks is a problem. But just lendibg those firms in distress money, will not solve the problem. They must correct the macroeconomic situation that got them into trouble.
And we know, Mugabe is not about to admit that he is doing anything wrong.
That’s the problem: always looking for money everywhere. If you don’t have money, where do you think others will get it? Ok, how did they get it? By passing racist land grab or indigenous policies? Borrowing with no limit? Tolerating corruption? You seen the work ethic of the Chinese? Sorry kakhulu.
As a Zimbabwean in diaspora it saddens me how people still await the government to solve or fix anything. They are bankrupt and only have political power to leverage when making whatever deals or agreements. Remember a parasite will eventually kill the host. I pray people in Zimbabwe realise that the government is just now filled with politicians who invested all they had to slither their way to that decision making seat so they could make returns on their initial investment. The people need to realise that a grassroots approach is required when dealing with the issues we face. Reclaim back the political power in peaceful non compliance with this government and govern from a sovereign point of view with mayors elected properly based on actual plans and aims not party allegiance. Children are dying in this eden like country due to people’s lack of wanting to take back our responsibilities. WE ARE EDUCATED AND ABLE so lets starve these leeches in power whose policies are what crashed us in the first place and still serves as a burdened yoke we have to carry to subsidise the new fleet of minister’s 2014 model 4×4. Enough is enough. Reclaim back your liberty.