$18bn stimulus package team on the cards
Africa Moyo Deputy News Editor
A technical team is being set up to craft operational details of the $18 billion economic recovery, stimulus and social package aimed at reviving Zimbabwe’s economic sectors affected by the global Covid-19 pandemic.
Operational details, which will specify the criteria, institutional coordination and access points for the facilities, will be announced after the consultative processes.
The stimulus and rescue package, which constitutes nine percent of GDP, was announced by President Mnangagwa and cuts across all productive sectors so that they get the critical liquidity to kick-start their operations and protect jobs.
The biggest chunk of the package (72 percent) goes to reviving production and business and 28 percent is for further upgrades of health services, in addition to what has already been spent.
The social side of the package is aimed at strengthening and expanding existing social safety nets and up-scaling investments in social and economic infrastructure, including recovery of assets destroyed by floods.
Giving details yesterday, Finance and Economic Development Minister Professor Mthuli Ncube said the $18 billion stimulus package is broken down as follows: Agriculture support ($6,08 billion), Working Capital Fund ($3,02 billion), Mining Sector Fund ($1 billion), SME Support Fund ($500 million), Arts Sector Fund ($20 million), Liquidity Release from Statutory Reserves ($2 billion), Health Sector Support Fund ($1 billion), Broad Relief Measures ($1,50 billion), Food Grant ($2,40 billion).
Agriculture got the biggest chunk given its central role in the national economy and the fact that it absorbs the largest share of the economically active population. The agricultural stimulus goes beyond relief, and is intended to fulfil Government commitments to ensure food and nutrition security and gain maximum self-sufficiency.
The plan is to minimise grain imports, the major area where Zimbabwe has been faced with the need to import food, and self-sufficiency will overcome any trade problems considering that the rest of the world is grappling with the Covid-19 pandemic.
Of the $6,1 billion set aside for agriculture, $3,2 billion will be channelled towards funding a comprehensive winter wheat programme this year with the 2020-2021 summer cropping programme set to get $2,880 billion to bring Zimbabwe into self-sufficiency for grains.
Said Prof Ncube: “Financing for the 2020-21 summer cropping programme will continue to be reviewed as the full impact of the Covid-19 becomes known.”
But it is anticipated that a comprehensive upward revision of the resources for the vulnerable farmers input support programme is now necessary and $2,88 billion will be provided to small-scale and communal farmers.
In terms of the working capital for industry sectors, Government will provide guarantees that will total up to $2,5 billion for bank loans accessed by industrialists needing working capital, a requirement brought forward by most business sectors as critical to restarting the economy.
An equity injection of $500 million to capacitate Silo Food Industries will be made to help the entity scale up operations while $20 million is set to be ploughed into the leather and textiles value chain.
In respect of the mining sector, a $1 billion credit facility for the gold sector aimed at both small-scale and large-scale miners will be introduced.
Part of the funding would be made in foreign currency since the sector requires a lot of consumables which are obtained outside the country.
The mining sector will get guaranteed fuel and power to avoid production disruptions, while there will be efforts to reopen closed gold mines by designating them as Special Economic Zones.
For the tourism sector, Government guarantees of $500 million have been put in place so those in this sector, the hardest hit of all in the formal economy, can access working capital from banks.
A waiver of value added tax payable by tourists for accommodation and visitors’ services has been granted to promote domestic tourism to help fill the gap created by global travel restrictions imposed by almost every country.
Seed capital of $20 million will also be set aside to kick-start a Tourism Revolving Fund to give additional working capital to those in the sector.
Government will seek contributions from international partners such as the World Bank, which have expressed interest to support Zimbabwean efforts.
The Zimbabwe Tourism Authority, which promotes local tourism, will also be supported while Government is keen to settle overdue bills with tourism sector businesses for services provided, another move that will unlock working capital.
Other relief measures include a relaxation of import duty on selected raw materials up to year end, lower interest rate of less than 20 percent, and restructuring of loans to allow companies to recover.
Prof Ncube said Government will continue sourcing resources in order to fully meet the challenges imposed on citizens and the economy by the Covid-19 pandemic, adding that the private sector remains critical to the execution of the stimulus scheme, with Government playing a facilitative role.