GOVERNMENT will guarantee US$750 000 of a CBZ loan to Luxaflor Roses, the country’s biggest rose producer, under a Covid-19 stimulus package for local companies.
A government gazette issued Friday said the
US$750 000 is half of a loan taken out by the company to pay for raw materials.
“It is hereby notified, in terms of section 300(3) of the Constitution of Zimbabwe, as read with section 18(2) of the Public Debt Management Act [Chapter 22:21], that the Minister of Finance and Economic Development hereby issued the following: Guarantee, binding the Government of Zimbabwe as surety for the repayment of US$750 000,00 (50% of the facility) to Luxaflor Roses (Private) Limited from CBZ Bank Limited to finance the procurement of raw materials for production and export of roses under the Covid-19 Economic Recovery and Stimulus Package,” Finance minister Mthuli Ncube says in the notice.
On May 1 last year, President Emmerson Mnangagwa announced a Z$18 billion Covid-19 support package for local businesses. That package included government guarantees of up to Z$2,5 billion for bank loans accessed by industries for working capital. Under the facility, qualifying companies apply and access funding through banks, with the government providing guarantees.
Should Luxaflor somehow default, CBZ would claim the guaranteed amount from the government. Under a similar fund for tourism, which was for Z$500 million, hotelier Mbano got a partial guarantee from the government in March.
Luxaflor, run by Aart Nugteren and his son, Roeloff, exports roses mostly to The Netherlands from its greenhouses at Concession. Last year, the company had plans to expand its planted area from the 16,5 hectares it had in 2018 to 200ha.
Zimbabwe was once Africa’s second largest flower grower after Kenya, but disruption during land reform sharply cut output. The country exports about US$3 million worth of flowers each year, most of which are sold to The Netherlands. At peak, Zimbabwe exported flowers worth US$67 million to Europe in 2001, according to TradeMap data.
Covid-19 had a major impact on Zimbabwe’s horticulture exports, which are among the country’s top four forex earners. Exports fell 13,5% from US$68,8 million in 2019 to US$59,5 million in 2020, ZimTrade says.
This happened because of lockdowns around the world, which weakened demand for Zimbabwe’s main fresh produce: peas, citrus fruits, berries, and flowers. — newZWire