Financial groups meet to craft short-term funding | The Herald

via Financial groups meet to craft short-term funding | The Herald November 25, 2013 by Farirai Machivenyika  

Government will today meet with local financial institutions to craft short-term financing for struggling companies.

Industry and Commerce Minister Mike Bimha said this while responding to a question by Manicaland Senator Patrick Chitaka on the fate of the Distressed and Marginalised Areas Fund that was established between Government and Old Mutual during the time of the coalition Government.

Dimaf was created after the two parties agreed to provide US$20 million each for the fund, but Government failed to meet its part of the agreement resulting in Old Mutual setting stringent conditions on the US$20 million it had set aside.

“In the short-term, we have to look at possibilities of revisiting a similar fund like Dimaf and on Monday I am having meetings with some of the financial institutions to see whether in a way there is a possibility to create short term funding for industry,” Minister Bimha said.

He said Dimaf had ceased to operate and Government was looking at various ways to assist industry, including restructuring the Industrial Development Corporation.

“In the Zim Asset document we have said we would like the Industrial Development Corporation to be configured to become an institution for industrial development much as Agribank will be poised for agricultural development,” said Minister Bimha.

“We believe that if IDC is configured and sheds off some of its companies and is capacitated it would be in a position to support the funding of industry so that’s more of a medium to long term.”

A number of companies have folded countrywide due to failure to access long term working capital and due to the effects of sanctions imposed on the country by the West.

International financiers shun the companies because of the sanctions, while other companies are barred from buying spares from western countries.  Minister Bimha said the finalisation of the agreement between Essar Holdings and Government for the resumption of operations at Ziscosteel was in progress.

“We will probably see the finalisation of this transaction before the end of this year, but work has already been started on the other activities,” he said.

Minister Bimha said some engineers from Essar were already in the country to refurbish equipment at New Zim Steel, formerly Ziscosteel.

Disagreements over access to iron ore reserves in Mwenezi threatened to scuttle the implementation of the deal.

Essar took over operations at Ziscosteel in a US$750 million deal.