Government says it has disbursed $24.7 million to distressed companies in the nine months to September 31 under a facility jointly funded by the government and the African Export Import Bank.
Zimbabwe’s industries are battling with high financing costs, with banks charging as much as 20 percent interest. A recent survey by the Confederation of Zimbabwe Industries showed that many firms were operating at a third of capacity and require $2 billion to replace obsolete machinery and operating capital.
The $100 million Zimbabwe Economic and Trade Revival Facility (Zetref) fund is intended to help companies retool, but its impact is limited due to the short tenure of the loans, high interest rates and the slow pace of disbursing the money.
“The pace of disbursement has been slow in relation to industry requirements and limited to a few companies,” industry and commerce secretary, Abigail Shonhiwa said in a speech read on her behalf at a workshop to resolve corporate financial distress.
Shonhiwa said another $17 million had also been disbursed under the Distressed and Marginalised Areas Fund (DIMAF) during the same period, although loans totalling $32.8 million had been approved.
Dimaf is a $60 million revolving fund with a five-year tenure set up by government and Old Mutual two years ago with contributions of $20 million and $40 million, to support ailing companies particularly in Bulawayo and is disbursed through the Central African Building Society (CABS).
CABS has disbursed the $40 million it provided to the fund while government is still to raise its $20 million share.