The Industrial Development Corporation of Zimbabwe (IDCZ) will engage two regional development finance institutions for a $50 million loan aimed at kick-starting the group’s development financing role for the local manufacturing sector.
This comes after indications that IDCZ failed to reach an agreement with the Industrial Development Corporation of South Africa (IDC SA) over a $20 million loan as previously agreed between the two parties.
A well-placed source told Business Times that IDCZ could not agree with the loan terms offered by the South African financial institution, thereby forcing them to look at other financing avenues.
“IDC Zimbabwe could not agree on the terms of the loan which were being offered by IDC SA. The terms were somehow expensive and this saw IDC Zimbabwe considering other financing avenues,” said the source.
The source added that the loan would be channelled towards providing working capital and re-tooling of companies in the manufacturing sector with an export capacity.
“The funding is aimed at providing working capital and retooling of companies with an export capacity. This is the idea going forward to make sure those companies that have capacity to export are well funded,” said the source.
The IDC SA loan application by IDCZ came after the latter had finished the repayment of a six-year $15 million loan facility availed by the South African finance institution that went towards the recapitalisation programme of its investments. IDCZ was incorporated through its enabling Industrial Development Corporation Act (Chapter 14:10) in 1963 to invest in industry as a state agency. The Act was amended in 1984 to allow the Corporation to promote investment and economic co-operation across borders.
IDCZ is mandated to establish and conduct any industrial undertaking, to facilitate, promote, guide and assist the financing of new industrial undertaking (including small and medium-scale), schemes for the expansion, better organisation and modernisation of and more efficient carrying out of operations in existing industries and industrial undertakings.