Source: Govt to make Dimaf bigger, accessible | The Herald July 28, 2016
Conrad Mwanawashe : Business Reporter
Government may consider revisiting the Distressed Industries and Marginalised Areas Fund to make it bigger and more accessible to more companies. Informed by the increased capacity at companies that benefited from the $40 million pot, Industry and Commerce Minister Mike Bimha said with recapitalisation companies can make a difference.“We would want to revisit Dimaf in terms of making it bigger and more accessible. I am sure when we do that we have companies accessing more funding and making a difference,” said Minister Bimha.
“The biggest factor to de-industrialisation has been funding in the sense that companies were unable to source finance from financial institutions. Even those financial institutions that had funding, it was short-term money which is not best suited for recapitalization and retooling.
‘‘That short-term funding came with punitive interest rates. But here we have companies that benefited from Dimaf and have improved.”
He was speaking after tour a number of companies in Bulawayo that benefited from some of Government’s measures, both in the form of policy initiatives and funding. The tour of companies marked the start of the Confederation of Zimbabwe Industries annual congress underway in Bulawayo.
The policy measures and capital assistance for retooling released by Government to distressed companies have had a positive impact on industry in Bulawayo with some of the beneficiary companies now in increased production capacity.
And for that industry says it is indebted to Government and will reciprocate by increasing production, the Minister of Industry and Commerce Mike Bimha heard yesterday.
Following a period of de-industrialisation as a result of failure to access affordable finance for retooling and the influx of cheap raw materials, Government implemented a number of policy interventions aimed at capacitating and improving industry competitiveness.
In a bid to help companies industrialise, Government introduced the $40 million Dimaf five years ago, supported by other policy measures which minimised imports of locally available goods.
Among the policy measures hailed by industry is Statutory Instrument 126 of 2014 which imposed restrictions on importation of tubes, pipes, conveyor belts and rubber hoses, among other products.
Also the recently promulgated SI64 of 2016 which removed several basic products, including food and non-food items from the Open General Import Licence, limiting imports to products not readily available locally.
This, industrialists said has helped them increase capacity.
“Without the Dimaf loan we wouldn’t have been able to achieve this last leg. We have also been to South Africa to meet potential partners to bring in some investment into the business,” Refrigeration and Air managing director Clive Paul Oxden-Willows said during a tour of his company. Refrigeration and Airconditioning manufactures cold rooms, panels and accessories.
Mr Oxden-Willow said apart from other challenges industry is facing, the company is able to meet local demand and even to boost its exports.
That was the same sentiment aired by General Beltings general manager Joseph Gunda.
At Mealie Brand, a subsidiary of Zimbabwe Stock Exchange listed Zimplow, Minister Bimha heard that the measures by Government have helped the company to rebound.
Zimplow focuses on agriculture, construction and mining and infrastructure development offering mechanisation solutions within the economic sectors it is involved in.
Although Mealie Brand benefited from Dimaf, the company is facing stiff competition from cheap Chinese and Indian imports of mostly counterfeit products.
Because of the cheap imports, Mealie Brand has not been running the plant and this means that it has made only 7 000 implements in 2016, down from about 31 000 last year. In 2012, Mealie Brand produced about 66 000 implements and this has sharply declined as more cheap imports flow into the country.
Producing a plough locally costs about $58 compared to imports landing at $35, while producing a plough share costs $2,32 compared to imported landing cost of $1,50.
That price differential has seen turnover for Mealie Brand forcing the company to lay off three quarters of its 350 member workforce.
As such, Mealie Brand managing director Walter Chigwada beseeched Government to include ploughs and accessories on SI 64.
“Our major challenge is that we have lost market share due to competition. Our products unfortunately are not on SI 64 yet. If things come right this year, we will be in a position to return to the 300-350 staff complement.
‘‘Not only are the Chinese imports affecting Mealie Brand in terms of pricing and production but are also infringing on the company’s patent rights.
“They just came and copied our designs. They have been violating our patent rights by bringing the same products into our market. We are spending a lot of money per year in protecting our brand and to do raids in certain markets. Both exports and local sales have gone down.
‘‘The impact on ploughs alone, which gives about 70 percent of our turnover, we did about 57 000 in 2012 but in 2015 we did about half that. By this time of the year we should have done about 26 000 by this time of the year,” said Mr Chigwada.