The Sunday News
GOVERNMENT will stop recapitalising ailing companies through the Distressed and Marginalised Areas Fund (Dimaf) and focus on ensuring that the Industrial Development Corporation (IDC) is fully resourced to provide funding for the industries.
In a recent interview, Industry and Commerce Minister Cde Mike Bimha acknowledged that efforts to bail out ailing firms through Dimaf had failed and Government was looking towards setting up a Special Purpose Vehicle to be administered by IDC.
“I admit that Dimaf was a drop in the ocean. It wasn’t sufficient and its conditions were not easy to meet for most of the companies thus the Government has come up with a Special Purpose Vehicle, which will make sure that IDC opens a new window to fund industry. It will be tasked to mobilise financial resources and direct them to industry,” Minister Bimha said.
Dimaf was a $40 million fund set up in 2010 to help companies retool. The Government and Old Mutual were supposed to inject $20 million each. To date, Old Mutual says it has put in $27 million.
Government failed to honour its part and to date about 50 companies managed to access funding. Of these 26 were from Bulawayo while the rest were from other parts of the country.
Minister Bimha said IDC has been tasked to raise funds to recapitalise distressed companies.
“The IDC board is in the process of mobilising resources. As Government we want the industrial funds to be allocated to the distressed companies. They will use various ways to mobilise the money through lines of credit, loans from financial institutions or bonds,” he said.
Minister Bimha said the disposing of shareholding in nine subsidiaries and associate companies by IDC was part of its efforts to raise funds.
“In the past IDC used to nurture and take over the administration of ailing companies and during that period it ended up building quite an empire and now we want it to stick to its business which is funding struggling firms,” said Minister Bimha.
IDC group public relations advisor Mr Derek Sibanda said the institution was being transformed from a static management services role to a full-fledged development finance institution by 2015, in line with Zim-Asset and the Industrial Development Policy.
He said its mandate would be to provide finance (medium and long-term equity and debt), facilitate and promote the establishment of new industries and industrial undertakings and the development, resuscitation of distressed and closed industries and industrial undertakings.
“The transformed IDC will fund small-holder beneficiating and value adding entities with potential for growing into competitive domestic, regional or international exporting enterprises along the sector value chains such as agro-processing,” said Mr Sibanda.
