Government has turned down a request from the Industrial Development Corporation (IDC) for direct budgetary allocation to clear off its debts.
BY MELODY CHIKONO
IDC, which has been granted the greenlight to become an industrial financing entity, submitted a request for a direct budget allocation of US$83 million to pay off debts.
The approval is part of ongoing measures to restructure the firm and, in this new role, the IDC will extend financial assistance to start-ups, critical areas identified by government and firms supported by measures to ramp up production.
The IDC has over the years been planning to dispose some of its companies and raise funds from the disposals to generate seed capital to fund its new projects
Finance minister Patrick Chinamasa, in his 2018 budget, said government was not a in a position to make the allocation given the country’s fiscal position, adding IDC should develop bankable projects which can be funded form the market.
“The Industrial Development Corporation submitted a request for a direct budget allocation of US$83 million to pay off their debts. Given the precarious fiscal position, IDC is being required to develop bankable projects and programmes that can be funded from the market, through such market instruments as bonds,” he said.
In light of this, Chinamasa indicated that Treasury, working together with the Ministry of Industry, Commerce and Enterprise Development, remains ready to under-write such issuances, by providing the necessary incentives.
However, the IDC will benefit from US$22.8 million which has been set aside for guaranteed loans scheme.
“An additional US$17 million has been allocated for our equity commitments to the multilateral financial institutions such as the African Development Bank and the World Bank, whilst US$22,8 million has been set aside for called up guaranteed loans for Ziscosteel, IDC and Famers World,” he said.
The IDC is looking at raising US$100 million seed capital to kick-start its development financing operations and is currently in advanced talks with IDC south Africa for a US$20 million credit line but there have also been indications that the Reserve Bank of Zimbabwe is coming up with a facility to fund this new initiative.