HomeBusiness DigestConstruction sector to benefit from new 30% finance scheme

Construction sector to benefit from new 30% finance scheme

Ngoni Chanakira

THE country’s construction industry is set to benefit from the 30% concessionary finance scheme introduced by the Reserve Bank of Zimbabwe to all productive and export sectors this week.

Under this facility, statutory reserves contributed by financial institutions are made available to commercial and merchant banks for on-lending on a revolving basis.

In terms of the Monetary Policy Statement announced by RBZ governor Gideon Gono in December the central bank advised that concessionary finance at a maximum all-inclusive interest rate of 30% would apply to all productive and export sectors.

In the construction industry Gono said companies and building contractors who were registered members of the Construction Industry Federation of Zimbabwe (Cifoz) were eligible for the scheme.

Other beneficiaries were in civil engineering.

They include blasting and excavation con-tractors, civil engineers, drilling contractors, earth moving engineering, construction engineers, hydraulic engineers, hy-draulic excavators, irrigation engineers, plumbing and drainage contractors, road contractors, sanitary engineers, water boring contractors, and water engineers.

The RBZ said other construction industry beneficiaries were from the technical profession such as architects and surveyors, electrical, electronic, mechanical, air refrigeration and air-conditioning engineers.

To access funds under the facility borrowers submit applications through their respective commercial and merchant banks.

Banks are then expected to carry out their normal viability and credit risk analysis, before submitting applications to the Apex Unit of the RBZ for approval.

In the event of non-performance by borrowers, 100% risk falls on the lending banks.

The RBZ said there was no limit on the amount which could be accessed by each bank as disbursements were not tied to a bank’s own statutory reserves.

“All productive sector financing should be from this facility,” the RBZ said.

“Funds are disbursed by crediting the account of the lending bank maintained with the RBZ upon approval of a loan application. Disbursement of funds to merchant banks is done through their nominated commercial banks.”

The central bank said applications would be processed and funds disbursed within two working days from the date of submission of application forms together with all the required documentation.

It said the full loan amount must be passed on to the borrower on the date when funds are credited to the commercial banks’ account.

“Banks are expected to adhere to all conditions stipulated by the Apex Unit,” the RBZ said.

The RBZ carries out offsite and onsite monitoring to check on the usage of funds, interest rate charged, compliance with disbursement terms and conditions, assess impact of facility on the operations of borrowers specific sectors and the economy, attainment of agreed performance targets, and to get feedback from borrowers.

Meanwhile estate agents contacted this week said the property market was currently “confused” as landlords hold onto their properties in anticipation of a price increase.

The RBZ has now banned the pegging or charging of properties in foreign currency causing prices to tumble on the market.

Most landlords have now removed their properties from the market and are now engaged in private sales.

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