Home / Business / Major boost for Zim firms

Major boost for Zim firms

Martin Kadzere, recently in Bulawayo
Zimbabwean firms could benefit from lines of credit being offered by regional and international lenders to recapitalise and boost operations, delegates attending the Confederation of Zimbabwe Industries conference heard last week.

Presenters from the African Development Bank, Industrial Development Corporation of South Africa and Export-Import Bank of India said last Friday, at the CZI conference, that their institutions had capital headroom for local companies seeking to revive and expand operations.

The public sector could also benefit from the facilities.

Thokoane Tsolo from IDC South Africa said while the institution’s exposure to Zimbabwe was R3 billion ($212,2 million), there was space to lend a further R2 billion ($141,5 million).

“We can grow that to R5 billion ($353,7 million),” said Mr Tsolo.

IDC SA currently has 25 projects in 17 African countries.

Established in 1940, IDC SA is a development finance institution, which promotes economic growth and development.

It is owned by the South African government under the supervision of the Economic Development Department. In the 1990s, its mandate was expanded to include investments in Africa. The Mozal aluminium smelter in Mozambique was its first regional venture.

AfDB senior policy analyst Eric Marega said while Zimbabwe was in arrears with the institution, lines of credit worth $50 million could be availed to the private sector.

This could double depending on the arrears clearance strategy that Zimbabwe will adopt.

“At the moment, the headroom for Zimbabwe is $50 million for the bank, but we are looking forward to see whether we can increase from $50 million to $100 million . . . and post arrears, I am sure we should be able to lend more  to the private sector in Zimbabwe to catalyse growth and development, ” said Mr Marega.

Zimbabwe is in arrears of about $1,8 billion to the AfDB  and the World Bank and negotiations are currently underway to craft a debt clearing strategy.

Clearing the obligations will see regional and international lenders resuming funding to Zimbabwe — stopped in 1999 after the country defaulted on its loan. Already, the International Monetary Fund and Britain have pledged to help Zimbabwe clear its arrears.

In 2015, India offered a concessional credit of $10 billion to Africa and Zimbabwe was eligible to benefit from the facility, said S Lamba, an official with Eximbank India.

Most local companies are seeking funding to recapitalise operations but have been hampered by limited options to long-term affordable finance. It was estimated last year that Zimbabwe’s manufacturing industry requires an estimated $2,5 billion to retool.

Antiquated equipment has resulted in low levels of production and productivity, uncompetitiveness among other challenges in the sector.

 

Source : The Herald

Check Also

Listed property firms gain ground

Enacy Mapakame Property Reporter Zimbabwe Stock Exchange (ZSE) listed property firms last week recovered from …

Leave a Reply

Your email address will not be published. Required fields are marked *