According to a draft policy, Zimbabwe Industrial Development Policy 2011—2015, the bank’s primary focus would be to finance the short and long term recapitalisation of industry.
“Sources of funding and the modalities for the operationalisation of the institution will be completed within the first six months of the policy coming into force,” it said.
The draft policy, which was unveiled on Wednesday, said government would “identify additional lines of credit of a short to medium term with grace periods of 3-6 months and a repayment period of over 12-24 months and make them available to industry on priority basis”.
“The target is to finance the procurement of raw materials, packaging materials, production consumables, laboratory chemicals, spare parts, repairs and maintenance of plant and equipment and other working capital costs,” it said.
The absence of an institutional funding mechanism specifically targeted for the manufacturing sector was identified as the drawback to an earlier Industrial Development Policy 2004—2010.
“This new IDP can therefore only succeed on a principle of an institutional framework that will not only provide the turnaround plan, but will harness and provide the required resources for the successful implementation of the IDP 2011—2015,” the draft said.
“There will be an establishment of a dedicated and well-resourced institutional framework in the form of an Industrial Development Bank that will drive the IDP throughout its development.”
The manufacturing sector needs recapitaliation to replace obsolete equipment which has increased production costs.
This has meant that prices of local products are more expensive than those obtaining in the region thereby killing the country’s competitiveness.
According to estimates done by the Confederation of Zimbabwe Industries (CZI), industry requires US$2 billion for recapitalisation.
Yet local banks do not have the money to finance the retooling and they offer money on short term basis.
Last year, government announced a US$70 million fund for companies to retool their operations.
The fund, the Zimbabwe Economic and Trade Revival Facility, is the brainchild of government and the Africa Export and Import Bank and is available to small and medium scale enterprises.
The draft policy wants to increase the manufacturing sector’s contribution to exports to 50% in 2015. Currently the sector accounts for 26% of the exports.
An average real GDP growth of 15% is envisaged under the policy framework.