Banks disbursing funds for retooling of companies
THE Reserve Bank of Zimbabwe (RBZ) and a number of financial institutions have started disbursing funds for the recapitalisation of companies whose products were placed on import restriction under the Statutory Instrument (SI) 64 of 2016.
Industry and Commerce Minister Dr Mike Bimha said the companies whose products were removed from the Open General Import Licence had started accessing funds for retooling.
“The companies have started accessing the funds (for retooling) but they don’t access them through ourselves (Government), it’s directly with the Central Bank. The Central Bank has the facility, so people actually approach the Central Bank if they want that capacitation,” said Dr Bimha.
The funding of the companies is aimed at building on the success of SI 64 of 2016 by further capacitating them to ensure a lasting solution towards enhanced productivity. The gazetting of SI 64 of 2016 in June 2016 saw the removal of 43 products from the Open General Import Licence (OGIL).
Goods removed from the OGIL require an import licence when being imported into the country. The measure does not ban importation, but limits the quantity of imports coming into the country with import licences only being issued to cover the gap where local production is not adequate to cover demand.
Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe acknowledged that a number of financial institutions have started disbursing funds to companies for recapitalisation buoyed by the success of SI 64 of 2016 which has seen most of them enhancing their production capacity.
“There are funds available from various financial institutions because institutions are now a bit more comfortable knowing that these companies have guaranteed off-take. So we have seen banks establishing various funds throughout the economy including these ones (funds) that have been set-up by the RBZ,” said Mr Jabangwe.
He said the financial institutions are being stimulated to disburse funding due to the realisation of the high demand of the products being manufactured by the companies whose goods were placed under SI 64 of 2016.
“It’s a better problem where companies are trying to see how best they can cover an available gap because the demand is already taken basically before they even manufacture. So we have seen that it has stimulated or encouraged funders to provide with opportunities for financing where they used to keep away because of previous non-performing loans,” said Mr Jabangwe.
He said the introduction of SI 64 OF 2016 had significantly enhanced industry productivity.
“We have seen some of the companies operating within three months from 30 percent capacity utilisation to 100 percent and we are now in a situation where by our packaging companies cannot cope with the demand that is coming from there. So we believe the SI 64 (of 2016) has benefited the manufacturing companies. There was a reported drop in imports value from about $ 1 billion within over just a year, which means that’s part of the impact of the Statutory Instrument. We have seen increases in employment and FDI (Foreign Direct Investment) because some of those suppliers who have been supplying the economy from outside the country have now started establishing companies within Zimbabwe,” said Mr Jabangwe.
He, however, said there was need to further capacitate the agricultural sector as manufacturers are still importing most of their agro-related raw materials.
“These manufacturing companies are now importing agro-produce because it’s inadequate. So these industries can now set performances as a stimulant or they can actually catalyse the development of agriculture because whatever you produce there is an off taker. We have now created off-takers for instance when you look at areas like soya beans, groundnuts because we are consuming the end products and we are now having out grower programmes being done so it’s now spreading incomes into the rural areas,” Mr Jabangwe.
He said there are a number of companies that are seeking to have their products removed from OGIL but hinted that there was need to increase the amount of local content in products.
“What has been seen as the appropriate tool is the establishment of the minimum local content because it works exactly the same way because it just indicates that certain products that we know we can produce locally we stimulate that they must carry a certain amount of local content and use that as a developmental tool. The beauty about that is that it is well accepted by the WTO (World Trade Organisation) and other countries including South Africa. So it won’t create as much noise as SI 64 but create the same impact so this is why we are working on together with Buy Zimbabwe, they are part of the team that’s pushing this issue of local content,” said Mr Jabangwe.