‘US$22.5m bailout isn’t enough’

LIVINGSTONE MARUFU

Captains of industry have indicated that government’s US$22.5m bailout is not enough to extricate companies from their woes, Business Times can report.

The revolving funding, launched last week by Finance and Economic Development Minister, Mthuli Ncube, is meant to help companies retool to enable them to ramp up production.

But, business leaders said the amount was too little as industry was looking at close to US$1bn to recover.

“.…That money is just a drop in the ocean given the capital needed to retool,” the  president of the Zimbabwe National Chamber of Commerce, Mike Kamungeremu told Business Times.

He added: “We have yet to quantify how much is required right now but over the years billions of US$ were required to retool the industry.”

The president of the Confederation of Zimbabwe Industries, Kurai Matsheza, said: “Though the fund is welcome, we need more capital to replace our machinery and equipment to become more efficient.”

Ncube said the Zimbabwe’s development agenda was guided by  government’s 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 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.

Where common problems are recurring, value chains can be used as a diagnostic tool to identify critical issues and blockages for specific groups and subsequently generate robust and effective policies and development strategies.

This will also provide a logical framework to formulate intervention strategies for producers to develop capacity.

Further to this, value chains are inherently scalable.

The value chain will also reduce the  country’s import bill and making products more affordable.

Local value chain development will also enable the identification of core rents and barriers to entry that determine who benefits from production for diverse final markets.

Experts say developed value chains can clear some of the economic challenges Zimbabwe is facing as a result of dysfunctional value chains, which have seen potential revenue leaching out of the country in the form of raw materials.