Senior Business Reporter
TREASURY has announced modalities for accessing the US$80 million the Government has allocated to the productive sectors from the US$958 million Special Drawing Rights (SDRs) Zimbabwe received from the International Monetary Fund (IMF).
Zimbabwe received nearly US$1 billion SDRs equivalent as part of a General Allocation of US$650 billion the IMF released to the multilateral lending institution’s member countries globally.
In a statement, Finance and Economic Development Minister Professor Mthuli Ncube said the Treasury had allocated US$30 million to the Horticulture Revolving Fund, and US$22,5 million to Industry retooling for equipment and replacement under a value chain revolving fund.
The Tourism Facilities Services Development and Upgrading Revolving Fund was allocated US$7,5 million while the Smallholder Farmers Irrigation Infrastructure Development Fund received US$20 million allocation.
Prof Ncube said the aggregated SDRs allocated to the productive sectors of the economy represented 8,4 percent of Zimbabwe’s total share from IMF SDRs.
“The steps for accessing the facilities are as follows: submission of an application through the participating banks, the respective bank shall conduct their normal credit assessments and normal due diligence through the risk sharing and co-financing model.
“The application from the bank should include a letter of support for the project from the line ministry; the banks will forward the approved applications to Treasury through the respective line ministry parent depending on the fund from which the 80 percent cash cover Government Guarantee is sought,” he said.
“Through the External and Domestic Debt Committee (EDDC), Treasury will appraise the applications and approve those that meet conditions outlined in the Framework for Evaluating, Monitoring and Managing Guaranteed and On-lent Loans.”
First Banking Corporation (FBC), CBZ Bank, National Merchant Bank (NMB), Central Building Society (CABS) and AFC Land and Development bank, are some of the financial institutions disbursing the loans from the SDRs for the productive sectors.
The announcement of the modalities for accessing the resources under the SDRs by the productive sectors is a step in the right direction as the move provides an opportunity for accessing funding.
This in turn, is in sync with the economic development thrust of the 2023 national budget statement where the Government seeks to strengthen and develop value chains in key sectors such as mining, agriculture and manufacturing.
The essence is to sustain economic growth and development in line with targets under the Government’s five-year economic blue-print, the National Development Strategy 1 (NDS 1).
NDS 1, which succeeded the two-year Transitional Stabilisation Programme (TSP), is the second step of the Second Republic’s drive to attain Vision 2030.
The economic development policy, which charts policies, institutional reforms and national priorities needed between 2021 and 2025, would be replaced by NDS 2 that is expected to lead the country into an upper middle-income economy by 2030.
In next year’s national budget statement, Prof Ncube said: “The desired structural transformation from a commodity-driven economy, into a diversified resilient economy is being achieved through interventions which promote value addition of primary commodities, diversify the local product range and exports, as well as adoption of innovative technologies.
“In line with NDS 1, the thrust of the 2023 national budget is to develop and strengthen existing value chains, promoting linkage of Small to Medium Enterprises with large corporates and identification of quick win value chains in agriculture, manufacturing and mining.”
The 2023 national budget also seeks to accelerate the structural transformation of mining, agriculture and manufacturing sectors with a view to expanding value addition capacity and diversifying the product range.
Eonomic Dr Davison Gomo said in the 2023 national budget, the Government is clear of its intention to promote sustained economic growth in line with NDS 1 aspirations.
He said mining and agriculture sectors are sitting on massive value and global demand for output which promotes economic growth and development in line with the aspirations of NDS 1.
“Those three sectors are the most critical sectors in driving the economy because this is where a lot of value is coming from, not only are we looking at the primary sector.
“Manufacturing is obviously a value addition sector, and by doing this you are putting the whole economic activities into perspective putting resources and emphasis in those areas where the realisation of NDS 1 and Vision 2030 is possible,” said Dr Gomo.