Industry scramble for US$30m bailout

LIVINGSTONE MARUFU

Zimbabwe’s ailing companies are scrambling to get a share of the US$30m mobilised by a consortium of banks, meant to help industry players retool, it has been learnt.

The consortium comprises FBC, Ecobank, BancABC and POSB.

Some executives from the lenders  said they would  exercise due diligence and will avail funds to deserving companies.

The executives said the facility was guaranteed by the government.

“As we speak, we have quite several applications from industry and tourism players who are ready to draw down the facilities. We are going through due diligence processes so that we can disburse the funds to all deserving applicants,” FBC Holdings CEO, John Mushayavanhu told Business Times.

Mushayavanhu said banks mobilised  the US$30m from their own resources.

He said some factories and tourist facilities have archaic equipment and are in need of replacement.

“Some of the rooms (of tourism facilities) that I have been to, you  don’t want to spend the night there and they are in serious need of refurbishment and renovation. If we are serious about growing the tourism  industry, we need to look into these aspects to improve the quality of our accommodation,” Mushayavanhu said.

He said over the years there was a tendency among borrowers that when a facility was guaranteed by the government it was a freebie and  were not paying back.

“Unfortunately regarding these facilities our banks are not going to allow that. If you read the agreement, what it says is that we will only go to the Minister (of Finance and Economic Development Mthuli Ncube) to honour the guarantee once we have exhausted all other means, and all the other means involve even sequestrating your estate,” Mushayavanhu said.

Ncube said banks should charge a reasonable interest rate as the government was guaranteeing the facility.

“Banks should extend reasonable interest rates to our manufacturing and tourism players so that they can be able to pay back the loans.

“The fact that banks are getting a guarantee from the government means they should lend to the productive sector on flexible terms and conditions,” Ncube said.

This comes as  Zimbabwe is implementing its  economic blueprint, the National Development Strategy (2021-2025) whose key priorities include, “the development and strengthening of value chains and structural transformation”.

This is complemented by the country’s National Industrial Development Policy.

A value chain can optimise operational efforts, reduce waste, and improve profitability.

Across the world, the development of local value chains contributes to economic development, particularly through the strengthening of local industries and job creation.