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Minister Bimha

Golden Sibanda Senior Business Reporter
Government will emphasise on addressing the problem of funding that has constrained industrial capacity utilisation, productivity and efficiency of manufacturing firms, says new Minister of Industry and Commerce Mike Bimha.
The minister said while the domestic industry was faced with a number of challenges, the single biggest problem was access to affordable long-term funds.

“It is fortunate that I am not new to the problems facing industry. I have been in the Ministry (of Industry and Commerce) for the past five years,” he said referring to his time as deputy minister in the inclusive Government.

“I also came from industry and I am familiar with most of the players in industry, so I have access (to information) and we can freely engage,” the minister said.

“The issue is that we know the challenges facing industry and Government had put in place policies such as the Industrial Development Policy and the Trade Policy to deal with these.”

Minister Bimha said what was lacking was the full implementation of the policies, but the pointed out that the greatest challenge lay in securing funding.

“There are other challenges (facing industry) of the enablers such as electricity and water, but the main one is, really, mainly on the funding side,” he said.

This comes as Finance Minister Patrick Chinamasa on Wednesday said Government’s preoccupation over the next five years would be spurring economic growth and increasing indigenous participation in the mainstream economy.

Earlier, Government indicated that industry will require about US$2 billion to resolve the issues around capacity utilisation, old equipment and efficiency.

Industrial capacity has fallen to around 45 percent due to lack of fresh capital injection for new equipment and technology and working capital to raise output.

Following a decade of recession characterised by hyperinflation Zimbabwe eventually adopted the multi-currency system in 2009, but with a dormant industry, no foreign capital inflows or external lines of credit, liquidity became an issue.

The situation has been compounded by exponential growth in imports due to depressed industrial activity, which drains most of the liquidity in the economy.

As a result of tight liquidity in Zimbabwe financial institutions have maintained significantly expensive interest charges on mostly short-term loans.

Nonetheless, even if local funding was reasonably priced, with US$4,43 billion total banking deposits the country would still remain with a yawning funding gap.

Government funding facilities such as the Distressed Industries and Marginalised Areas Fund and the Zimbabwe Economic and Trade Revival Fund had a positive impact on selected firms but are not enough to plug the funding gap. Against this backdrop, Government will need to unlock several external multimillion-dollar lines, ensure increased inflows of foreign direct investment, portfolio inflows and promote growth of exports to improve liquidity in the economy.

Apart from the battery of factors hounding local industry Government will also need to support the agricultural sector to increase output and productivity. Shortage of raw material is also a major problem for local industry.

Minister of Agriculture, Mechanisation and Irrigation Development Dr Joseph Made said while the private sector has a role in supporting agriculture it was Government’s responsibility to fund agriculture to ensure food sufficiency.

Minister Made said the agro-industry was the basis for driving economic growth, employment and wealth creation, hence the need for the private sector and Government to fund agriculture to improve production and per unit yields.

About 60 percent of raw materials used in the manufacturing industry come from agriculture, which underlines the need to strategic importance of the sector to industry.