Zim govt moots rescue fund for distressed firms

02 Nov, 2018 - 14:11 0 Views
Zim govt moots rescue fund for distressed firms Minister Mangaliso Ndlovu

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

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