BULAWAYO — Industry and Commerce minister Mike Bimha says local companies require US$8 billion for re-tooling to bring them back to life as it emerged the fund meant for resuscitating distressed industries has failed to give them a new lease of life.
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In 2011, government and Old Mutual formed the US$40 million Distressed Industries and Marginalised Areas Fund (Dimaf) to help companies retool.
Speaking in Bulawayo recently, Bimha said Dimaf only assisted a few companies due to the short term nature and high interest rates of the loans.
“The resources were limited and could not meet industry’s requirements, as they were far below the US$2 billion that was required then, a figure which has since risen to US$8 billion,” Bimha said.
Under Dimaf, government and Old Mutual pledged to put US$20 million each into the fund.
For companies to be considered for funding, they had to provide collateral, audited financial accounts for the past two years, projections for capital expenditure, loans covering the tenure of the loan, budgets and cash flows and turnaround strategies that included a business plan.
Most companies say the requirements were too stringent to meet and Bimha expressed concern on the high rate of company closures in Bulawayo.
“I have had an opportunity to tour Bulawayo recently and what I witnessed is sad and deplorable. Only a few companies are still operating and I am informed that as we speak, some companies are actually moving their branches from Bulawayo to Harare due to low business,” said Bimha.
The minister said the government was planning to declare some cities and towns Special Economic Zones (SEZs) so they could be able attract investors.
“I wish to inform all stakeholders that the government is in the process of setting up Special Economic Zones in various parts of the country. Bulawayo together with Beitbridge, Mutare and Norton are towns that are earmarked to be declared SEZs,” said Bimha.
“In Norton the government plans to partner with Chinese investors to establish SEZs in order to attract investment and resuscitate industry in the town which is depressed,” he said.