© GOVERNMENT has given $30 million to the Industrial Development Corporation of Zimbabwe (IDCZ) as capital for major investment projects, in a bid to support the slowing economy.
This comes as low levels of production and the attendant trade gap, insignificant foreign direct investment and lack of access to international finance due to huge arrears have been identified as significant causes for the poor performance of the economy.
The $30m injection is expected to help the low-income country to achieve rapid economic growth through industrialisation.
“The Industry and Commerce ministry would like to advice the business community and its stakeholders that the Industrial Development Corporation of Zimbabwe (IDCZ) has been given $30 million funding from the government in pursuance of industrialisation,” read a statement by the Industry and Commerce ministry.
Industry and Commerce minister Mangaliso Ndlovu further told the Daily News that funding will urgently be disbursed to revamp the sector upon application.
“It’s not disbursed for youths and women, it’s for industrial development and they are also encouraged to apply. It’s for industrial development, mainly working capital relief given the quantum,” he said.
Zimbabwe has reportedly been losing nearly $2 billion annually due the loss of competitiveness as the use of antiquated machinery has further depressed production processes.
Zimbabwe’s agro-sector, in particular, still relies on equipment acquired in the 1950s and is in dire need of massive retooling to upscale production.
Agribank reportedly needs $200 million to recapitalise and retool the country’s agriculture activities, while manufacturers need around $1,2 billion to retool.
Confederation of Zimbabwe Industries chief economist Tafadzwa Bandama has said some of the major drawbacks for industry growth are antiquated machinery, shortages of raw materials, the high cost of doing business, and current volatile macroeconomic environment.
“Most of the companies highlighted that business has declined relative to the period before September 2018, and forsee business likely to further decline going forward,” she said.
Government has been taking its begging bowl to financial institutions such as African Export Import Bank (Afreximbank) in a bid to unlock funds to help develop export-related companies which earn the country substantial foreign currency.
Zimbabwe used to boast a well-integrated and diversified industrial sector, but over the past two decades, suffered massive de-industrialisation and rapid informalisation.
The country’s industrial capacity utilisation, which stood at 48 percent in 2018, is projected to drop to 34 percent in 2019.