FINANCE and Economic Development minister Herbert Murerwa has pleaded with “distressed” companies to take up the $3 billion allocated to the Distressed Companies Fund, which the business communit
y has been reluctant to take up.
“Government has so far made $3 billion available for the purpose of reviving distressed companies but owing to a low response from potential companies, utilisation of these resources has remained low,” Murerwa said in an address delivered on his behalf at the National Economic Consultative Forum (NECF) discussion series last week.
He said the ministerial committee set up for consideration of projects under this fund was therefore inviting more companies in distress to take advantage of the facility.
The Zimbabwe Development Bank (ZDB), which disburses the fund on behalf of government, receives and assesses applications for onward transmission to the ministerial committee that includes officials from the Industry and International Trade, Finance and Economic Development, Youth and Gender Development ministries, the Industrial Development Corporation and the Reserve Bank of Zimbabwe, for further consideration.
But industrialists and economists say the exclusion of the business community in the implementation of the fund and the bureaucratic red tape involved in the approval of applications had cast a dark shadow on the utilisation of the fund.
They say the presence of a ministerial committee at the expense of the private sector in the implementation and administration of the fund cultivates distrust towards the facility.
“The prescription is not what the industry wants. Most companies need foreign currency to import raw materials and providing access to the Zimdollar is not helpful at all,” John Robertson an economic consultant said.
Robertson said it was difficult for business persons to take up the loan facility as government had failed to control rowdy elements of war veterans and militias from harassing business persons.
The Confederation of Zimbabwe Industries acting chief executive officer Farai Zizhou said the ZDB should be given the green light to decide on viable projects and not the ministerial committee.
He said the description of a “distressed company” had not been communicated well to industry and hence the uptake of the fund had not been to expectation.
Zimbabwe National Chamber of Commerce chief economist James Jowa said it was a serious anomaly to exclude the business community in the implementation of the fund that could have given credit to the decisions to approve or disapprove applications.
“We were only involved up to the 2003 budget process which formulated the fund but the government excluded us in its administration and implementation,” Jowa said.
ZDB credit control manager Gregory Mupfumira, in charge of the fund, confirmed the slump in applications for the fund with only $400 million out of total commitments of $1 billion for 2002 disbursed.
“There has been a slump in applications owing maybe to the economic events on the ground but we will be flighting more advertisements next week to invite more applications. We normally are flooded with applicants but this has slowed down,” he said.