Government is in talks with Afreximbank for finance for private companies that are seeking offshore borrowings to retool, Industry and Commerce Minister Mangaliso Ndlovu has said.
The development comes after Government last year announced that it was considering providing credit guarantees for offshore borrowings by private firms seeking funding amid reports local industries require at least US$2 billion to retool.
In recent years, the Government has been mainly providing guarantees to State-owned entities.
Minister Ndlovu said the process is ongoing and Government will be addressing sovereign risk-related issues and making sure that funds are released to local firms.
"The issue of providing credit guarantees is an ongoing process and it will be looked on a case by case basis. What we have done in the meantime is to unlock the US$30 million IDC funding. We are in talks with Afreximbank. There is good progress made there to try and unlock funding and the ministry of finance is also seized with the issue of funding so guarantees will come when companies are able to present projects which Government believes are worth considering.
" . . . But there are complications. The first one being . . . under normal circumstances we do not accord guarantees to private companies, but for specific purposes of retooling there will be considerations by treasury. But there is numerous funding that are being unveiled for the private sector to take advantage of.
"The Afreximbank fund will be done on a company to company basis because they want to have direct consultations with the company. For us what we are doing is to make sure that the funds are availed and to any sovereign risk-related issues that they want us to attend to," said Minister Ndlovu.
Zimbabwe's manufacturing, mining and construction sectors, among others, are expected to drive economic growth and have already shown a solid performance since January last year.
The growth has been mainly driven by increased consumer demand and import restriction measures put in place by the Government to protect local companies.
However, the greatest setback has been the foreign currency shortages and antiquated equipment that has rendered local products uncompetitive.
This has seen many companies struggling to secure raw materials to operate at optimum levels.
Meanwhile, Minister Ndlovu also highlighted that the formulation the National Industrial Development Policy and the National Trade Policy that are set to grow the export-led industrialisation strategy are at advanced stages.
"We have spoken about the National Industrial Development Policy, which was supposed to have been launched last week, we are waiting for just a minor step which we will do on Wednesday then it goes to Cabinet the following week so it's almost out there and it will be going together with the local content strategy.
"The National Trade Policy will take a further three weeks. Its ready but it just has to be submitted to other authorities, I don't want to put the cart before the horse because it still has to go through Cabinet but it will be ready for Cabinet next week," he said.