Dumisani Nsingo, Senior Business Reporter
THE Government is looking forward to improving accessibility of the Distressed and Marginalised Areas Fund (Dimaf) II, as well as managing finances for the beneficiaries of the facility to effectively improve their productivity.
Industry and Commerce Minister Dr Mike Bimha said the Government was working on improving the flexibility of Dimaf following an outcry by most companies that cited its conditions as punitive when the facility was introduced about seven years ago.
He, however, could not be drawn to divulge when the facility would be unveiled only saying: “it’s on the cards”. Dimaf failed to fully attain its objectives largely due to insufficient funding and stringent requirements which companies were to meet before accessing the money.
It was initiated in 2010 to help companies retool while disbursement started in 2011. The Government and Old Mutual were supposed to inject funds into the project. Old Mutual’s subsidiary, CABS manages the facility.
A total of 48 companies, about half of them from Bulawayo received loans worth $28 million from Dimaf between 2011 and 2014.
Companies hardest hit by the economic challenges of the past decade were mainly located in Bulawayo, once the country’s industrial hub that employed thousands of people.
“Dimaf as you know is handled by the private sector. It’s the private financiers who have been handling that. Our role was to ask them to put a fund to assist industry. There are companies that have been assisted and I think Cairns (Foods) is one of those companies, which virtually benefited in a positive manner and it helped to improve its capacity utilisation. There were successful stories but there were also unsuccessful stories,” said Dr Bimha.
Cairns Foods which is a unit of food manufacturing firm Cairns Holding Limited managed to acquire and install a new baked beans line at its Mutare factory using a $1 million loan facility it sourced from Dimaf last year. This follows the acquisition of new packing machines on chip line installed at its Harare factories in December two years ago using funds from Dimaf.
However, Dimaf continues to be a contentious issue with some companies in the designated areas complaining that accessing the fund was almost impossible.
Previously, the minimum requirements for companies to qualify to access the funds included two years accounts in the form of management accounts or financial accounts, acceptable collateral, clean tax records, projections for capital expenditure loans, budgets and cash flows, among others.
“There were complaints by some of the companies that it wasn’t easy to access those funds and that some of the requirements for you to be considered were difficult to achieve. For example they wanted you to produce a financial statement for the past five years and some of the companies had no financial statements to produce and even if they produced it, it was just losses and losses so it was not user friendly and what we want is to look at Dimaf II,” said Dr Bimha.
He said efforts were being made to ensure that the fund was being modelled in a way in which conditions for borrowing are specifically designed to suit ailing entities as well as ensuring the capital injection improves the beneficiaries’ capacity utilisation through recommending experts to administer and manage the finances.
“We want to look at improving Dimaf in terms of accessibility, the size of the fund and also to put another aspect of expertise given to those companies that get help because you might get the help in terms of finances but you also need help in managing that money . . . so we are working on that, its work in progress. We are working with business associations and financial institutions,” said Dr Bimha.