Zimbabwe’s manufacturing industry this week escalated the push for state assisted bank guarantees to bolster plans to stem capital flight from the country’s second biggest metropolitan — Bulawayo.
In an interview with the Zimbabwe Independent, Stephen Ncube, president of the Confederation of Zimbabwe Industries (CZI)’s Matabeleland chapter proposed a funding plan that resonates with a previous one cobbled during the inclusive government between 2009 and 2013 — a US$48 million package that tapped from government and a mortgage lender.
Known as the Distressed Industries and Marginalised Areas Fund (Dimaf), the funding was targeted at reviving hundreds of companies in Bulawayo, where factors like water shortages have abated an exodus.
Dimaf flopped after parties to the power-sharing administration — Zanu PF and the Movement for Democratic Change — failed to give the plan political support.
Early beneficiaries of the injection were also accused of spending it on luxury cars and expensive holidays. Ncube, who spoke as Finance Minister Mthuli Ncube prepares to present the 2025 National Budget later this month, said re-industrialising a region that was once a nerve centre for manufacturing would require a strategy that delivers concessionary funding.
He said deliberate efforts to reduce costs would build the necessary traction for investors to return.
"Bulawayo companies need targeted funding for operational and capital expenditure at concessionary rates,” Ncube said.
“(This will help) to avoid relocation to other cities or total collapse. (We must) provide fiscal and non-fiscal incentives to current investment and prospective investment. It must be provided by central government or financial institutions with the government providing sovereign guarantees,’’ the CZI chief noted.
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He emphasised that the 2025 National Budget must have such relief measures.
Economic development incentives are typically delivered through the creation of public-private partnerships that create bilateral or multilateral legal relationships between the recipient businesses and other prospective stakeholders.
Incentives are most prominently managed by state level government agencies, local level jurisdictions, and the providers of utility services in order to attract and retain businesses within their jurisdictions, including cities like Bulawayo.
“The city should consider reducing the current tariff regime by at least 50%,” Ncube said, referring to Bulawayo.
“The city needs to consider other financing options such as a municipal bond because there is always a good appetite for capital projects.
“However, this will depend on the currency, the secondary market and the coupon rate,” he added.
Historically, Bulawayo was the industrial hub of Zimbabwe employing thousands of the country’s workforce and producing a range of products.
This was before the exodus to Harare kicked in, underpinned by many factors,including water problems that authorities have struggled to address for 44 years. Bulawayo sits at the centre of strategic railway networks, with the National Railways of Zimbabwe headquartered there.
The proliferation of smuggled goods on the domestic market, Ncube further said, was adversely impacting local companies with most clothing firms winding down operations.
“The other issue is rampant smuggling of goods which has resulted in the collapse of the clothing industry and is seriously threatening the sweets and biscuits manufacturing industry,’’ he said.
Broadly, Ncube also called on authorities to downwardly review water and power charges which were militating against companies in the city.
“The water and rate charges are too high compared to other cities. For example, shop licences increased by 200%," he said.
“There are other charges that have slowed down investment in the city such as building plans fees and subdivision fees,’’ he said.
