When the US$100 million Zimbabwe Economic and Trade Revival Facility was launched in August last year, there was optimism among industrialists that the facility will benefit local companies experiencing funding constraints.
But barely a year and a few months after the unveiling of the facility, it has emerged that there is a low uptake of the funds owing to tight lending conditions amid revelations that financiers of the revolving scheme, the African Export and Import Bank (AFREXIMBANK) are now in talks with the Ministry of Finance and banks to relax the lending requirements.
While taking into consideration the challenges affecting companies across the country in the form of limited capital, industrialists are questioning the credibility of treasury authorities on the ZETRF scheme.
An industrialist, Mr. Joshua Mudoti says it is in the interest of the industry for treasury to introduce cheap funds aimed at increasing productivity.
â€œIndeed we are not happy that the facility is failing to get recognition,â€ Mr. Mudoti said.
Although a latest survey carried out by the Confederation of Zimbabwe Industries (CZI) show that the countryâ€™s manufacturing sector productive capacity has increased to 52% from an average of 40% last year, it revealed that tight lending conditions have prevented local firms from borrowing funds to recapitalise.
An Economic commentator, Mr. Godfrey Dupwa says government should instead take a leading role in providing financial rescue packages.
â€œWe are not happy with the facility and something should be done,â€ said Mr. Dupwa.
While the main focus of the Zimbabwe Economic and Trade Revival facility is to restore business confidence to the manufacturing sector which experienced a 10 year old recession due to sanctions induced funding challenges, a member of the ManicalandÂ Chamber of Industries, Mr. Sailas Manzunzu says fiscal authorities have failed to fulfill their mandate of increasing productivity by ensuring that distressed company loans are offered atÂ affordable rates.
â€œWe hope Biti will do something on the matter to resuscitate industry,â€ Mr. Manzunzu said.
Whether the Zimbabwe Economic and Trade Revival Facility was really an instrument to facilitate the recovery of industry is a key element that is worrying industry given the prohibitive lending conditions.
However, the key question is to what extent can the treasury continue to come up with loan facilities attached with tight lending conditions yet productive sectors are in dire need of cheap loans.