Tinashe Makichi
The Cairo-based African Export Import Bank (Afreximbank) is in discussions with a subcommittee of the Ministry of Industry and Zimbabwe’s private sector concerning the availing of a $300m facility to support export-related companies, Business Times can report.
This follows reports that Zimbabwe is losing in excess of $2bn annually through the loss of competitiveness mainly emanating from the use of antiquated machinery in production processes. About $500m is required for the industry to retool.
Industry and Commerce Minister Mangaliso Ndlovu told Business Times that the government had made “significant progress to unlock the potential of funding, cognisant of the urgent and critical need to revamp otherwise largely antiquated equipment”.
“We have engaged the Afreximbank to work together with the private sector, and I was advised that a sub-committee comprising my officials and private sector representatives has been set to ensure that we tap into the available facilities,” Ndlovu said. “Following previous engagements, Afreximbank indicated their intention to avail close to $300m and the bias mostly will be on exporting companies.”
He said a facility between the Botswana financial services sector and the government was being worked on, which will result in the private sector directly accessing funding from these institutions.
“We are also in the process of negotiation with South African banks to avail both trade finance facilities,” he said.
Zimbabwe’s manufacturing sector is crying for cheap funds for re-tooling to improve performance and ensure production of quality goods.
A number of companies in Harare and Bulawayo in particular, are in dire need of retooling, as they are using obsolete machinery, designed in the early 1940s.
A state of the manufacturing sector report by the Confederation of Zimbabwe Industries showed that antiquated machinery, shortages of raw materials, the high cost of doing business, and drawbacks from the current macroeconomic environment were the major constraints facing industry.
If the Afreximbank facility comes to fruition, it will be the second time the Cairo-headquartered bank has bailed out local industries. In 2011, Afreximbank injected $50m into a $70m Zimbabwe Economic and Trade Revival Facility for local companies to retool.
The country’s manufacturing sector has gone through a decade of de-industrialisation and in most instances experienced low capacity utilisation and low productivity levels. This has taken away the competitiveness that the local manufacturers require to compete with foreign products.
The manufacturing sector was projected to grow by 1.7% last year, from an earlier projection of 2.1% weighed down by foreign currency challenges, exchange rate misalignment, inflationary pressures, and rebasing effect.
