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Zimbabwe’s private sector has been receiving a great deal of support from the Government, both through special programmes and through being considered favourably when the very large and growing Government capital budget is being spent.

Last week President Mnangagwa stressed this. Government was giving priority to the local business sectors when it came to choosing suppliers of goods and services and awarding contracts.

Considering that more than a third of the national Budget is now allocated to capital spending there is serious money when it comes to Government tenders so this promise is not something light.

The President did put in his caveats. He was praising those Zimbabwean companies that were competent, hard-working, skilful, honest and fair when it came to pricing.

This is fair enough as the Government is not spending its own money, but the money collected from the Zimbabwean taxpayers, who obviously include the private sector and their employees.

So there can be no waste or special deals or favours. But so long as the Zimbabwean company meets the criteria set down for each order or job the Government puts out to tender, and so long as its pricing is within the rational range, it will be looked at very favourably.

From the Government’s point of view this policy makes sense. It gets a double benefit. For a start it gets a supplier who it knows well and knows will be careful since it is based locally and cannot just vanish if it makes a mistake.

But secondly it is pumping money into the Zimbabwean economy, money that will stay in the country and is largely been used to create Zimbabwean jobs and grow the economy faster.

Already we have seen more and more Zimbabwean firms hired. In one area, roads, a number of competent Zimbabwean companies are rebuilding the Harare-Beitbridge highway. The cost is lower than what was offered by an external contractor, but the work, which is checked very carefully by the Government engineers before being accepted and signed off, is considered excellent quality.

The relationship between the road contractors and the Government has been expanded this year with the emergency programme to rehabilitate damaged roads.

Those firms with good reputations, plus firms new to Government contracts, but who were able to show what they have done in private sector business, have won some good business and have been giving value for the money they are paid.

The arrival of Covid-19 in Zimbabwe caused a sea-change in some attitudes in some areas of Government as it was realised that local businesses could perform better than had been expected and that they could provide the quality products at the right price that were needed.

Now we have the Minister of Finance and Economic Development explaining the US$30 million from the recent grant of International Monetary Fund special drawing rights that is being transferred to a special revolving fund to be run by the banks that private sector industrialists can draw upon for retooling and for working capital.

The IMF money can be used, to a degree, for this purpose because one of the reasons the IMF made the grants was to allow Governments to repair the damage caused by Covid-19 in their business sectors.

Admittedly the first reaction from the Confederation of Zimbabwe Industries is that the sum is not enough. No one ever suggested that it was; in fact it is something extra.

However, the CZI have a point since bank lending is well below what is required. Normally business expansion and capital spending is paid for from accumulated reserves, extra equity and bank borrowings, the precise mix of sources depending a lot on what is required and what sort of business we are talking about. At the moment, even when the IMF money is included, the bulk of Zimbabwe’s foreign currency holdings are held by the private business sectors and the more than US$1,7 billion deposited in foreign currency accounts is largely made up of accumulated retentions from exports.

While some of the incredible sum comprises money that exporters are holding against their next set of orders for foreign supplied equipment or raw materials, or for their own expansion, some of it is just accumulated profits shoved into a US dollar-denominated bank account paying zero interest. Companies do this to maintain value.

In a normal world banks would be on-lending some of these deposits. This in fact is what banks do; they pay depositors interest to keep money in their accounts and lend a percentage to others, at a higher interest rate.

The gap is the bankers profit, and can cover bad debts although banks tend to go to quite extreme lengths not to lend to dubious people.

So the CZI could be using its muscle within the private sector to see what can be done to use at least some of these FCA holdings in a normal banking business.

Here the US$30 million from Government might be useful as a show-piece, proving industrialists can and will pay back what they borrow and so encouraging others to make money from doing the same.

The other usual source of capital in a capital starved country is foreign banks. Here the sanctions of almost two decades make this difficult and foreign banks are very nervous of lending to a Zimbabwean company in case they breach some rule or regulation.

While the CZI never suggests it has political favourites, and rightly so since its members must be scattered across the political spectrum, there is a perception in some circles, especially foreign ones, that Zimbabwe’s business sectors tend to have a majority favouring the opposition.

Regardless of the truth of that, it does give an opening to the CZI and others to press hard for the removal of sanctions by stressing that they harm private sector more than the Government and that they are not changing anything.

Business organisations have been making this sort of thing clear, but perhaps they can do more and garner support among other business organisations outside the country, who might well want to do more business within Zimbabwe.