eBusiness Weekly
HARARE – The Zimbabwe government is considering setting up a special fund to assist distressed manufacturing companies retool and boost their productivity, Parliament heard on Thursday.
Faced with crippling foreign currency shortages coupled with lack of access to funding for working capital, Zimbabwean manufacturing industry is struggling to produce enough to meet local demand, forcing the economy to rely on imports to close the supply deficit.
Industry and Commerce Minister, Mangaliso Ndlovu told the Parliamentary Portfolio Committee on Industry and Commerce that the government would not sit idly by while industry struggled but would not avail funds for free.
“There are considerations of having a seed venture fund that will assist those companies that are struggling but there has to be strict and tight administration of those, preferably under financial institutions,” he said.
“Normally when companies think that it’s a government fund, the temptation is to abuse it. Ours is to interrogate options that we can use to raise this fund and then the Ministry of Finance will advise on how best to administer it but we are certainly keen on assisting these companies that are struggling as well as of course the new companies.”
The Zimbabwean manufacturing industry has said it requires over $1 billion for re-tooling annually as most companies are using antiquated equipment that is making production processes expensive leading to failure to compete on the international market.
The failure to produce competitive goods has resulted in fewer exports and the opening up of doors for imports using scarce foreign currency.
Meanwhile, Ndlovu said the government has requested the manufacturing industry to continue looking at its cost factors with a view to reducing the prices of goods which recently shot up.
“We are not controlling prices but have adopted an inclusive approach that entails that we engage. We are asking them to continue interrogating their cost factors to make prices affordable for consumers,” he said.
He said the lifting of import restrictions on some basic goods had forced some who had hoarded commodities to offload them onto the market.
Zimbabweans were in recent week faced with shortages of goods after a wave of panic buying induced by developments in the market. – New Ziana