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US$1 billion Stimulus Package for Industry

GOVERNMENT intends to introduce a stimulus package for troubled industries through an injection of a US$1 billion external credit facility to finance restocking of raw materials and acquisition of equipment.


The Short Term Emergency Recovery Programme (Sterp) launched yesterday by President Robert Mugabe says government would source lines of credit for paralysed companies to stimulate the supply-side of the economy.

Under the programme, measures would be introduced to produce  optimal capacity for “strategically targeted industries” in food processing, beverages, textile and ginning, clothing and footwear, fertiliser, pharmaceutical, motor industries, packaging, paper printing and publishing, chemical and petroleum products and non metallic mineral produtcts.
Government would also target retailers and wholesalers in the restocking exercise.
“Manufacturing will be the epicentre of any stabilisation programme,” the Sterp document reads. “In this regard, the expected outcome of Sterp is to ensure that the current industrial capacity utilisation is increased from the current low levels of around 10% to over 60% in the next six months.”
In order to achieve the targeted capacity utilisation, the inclusive government would support the manufacturing sector through the establishment of the external credit facility.
“Achieving that (60% target) has the multiplier effect of dealing with general economic recovery, unemployment, depressed demand and low income levels as well as poverty reduction,” the document reads.
The external credit facility would be made available to all companies but with “strict criteria” to avoid “abuse and misuse”.
“Sterp recognises the need to stimulate investment. Therefore it is the intended objective of increasing investment capacity from 4% of the GDP to over 25% of GDP,” the  document reads.
Turning to mining, Sterp proposes  a separate exploration from extraction policies and strategies.
Government has also scrapped off surrender requirements for miners and hiked taxes to boost government coffers. This policy reverses surrender requirements introduced by the central bank in the first half monetary policy statement last month.
“Sterp will thus oversee the crafting of an exploration, registration and extraction policy which will form the basis for a new comprehensive mining sector legislation… Government proposed to review mining rights, pricing of minerals and abolish surrender requirements to the central bank,” the document reads.
In addition “the inclusive government will explore the establishment of an institution responsible for exploration issues including collecting and building and comprehensive database on quantity and quality of the country’s mineral endowment.”
“A key component of Sterp in reviving the mining sector will be to ensure that international commodity prices are levied and received by mining houses. In short, the pricing gap in respect of which domestic prices lagged behind international prices is now a thing of the past.”
“To enhance value, the marketing of all minerals other than gold will be done under the supervision of the Ministry of Mines and Mining Development and the Mineral Marketing Corporation of Zimbabwe, a board established through an Act of Parliament,” reads the document.
Gold, according to Sterp, “will remain a strategic reserve asset, whose licensing and marketing will be in terms of the Gold Trade Act. However international prices will still have to be paid to the producers and no amount will be retained by the Reserve Bank.”
Government said it will “assess and evaluate the authenticity” of an estimated US$30 million owed to gold producers by the central bank with the aim of repaying the arrears within a “reasonable time.”
The Reserve Bank has since 2007 failed to pay for gold deliveries which has resulted in the suspension of mining activities last year.
To ensure full exploitation of mineral resources, the economic blueprint proposes to expedite amendments to the Mines and Minerals Act, which is already before Parliament.

BY BERNARD MPOFU

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