GOVERNMENT has unveiled a ZiG100 million facility for local manufacturing firms to retool and expand operations, accelerating the country’s industrialisation drive.
This follows the recent signing of a Memorandum of Understanding (MoU) between the ministries of Industry and Commerce and Finance, Economic Development and Investment Promotion to establish the Industrial Development Fund (IDF) to provide “patient capital” to strategic industries driving value addition, import substitution and employment creation.
The fund is administered by the National Venture Capital Company Zimbabwe (NVCCZ).
The decision to create the fund came after the Industrial Development Corporation (IDC), which used to perform a similar role, was placed under the control of Mutapa Investment Fund.
Both ministries agreed that a dedicated fund, managed directly, would be the most effective way to channel resources to selected industries of strategic importance.
In a joint statement, the Ministry of Industry and Commerce and the NVCCZ said the funds would strategically prioritise projects with the potential to boost domestic value chains and are likely to generate innovative solutions critical to the country’s industrialisation.
The funding would be used for various essential needs, including the procurement of modern machinery, infrastructure expansion and development, working capital requirements and supporting crucial research and development initiatives.
The initiative is a direct response to the Government’s push for increased local production and reduced reliance on imports.
“The IDF targets existing corporates engaged in manufacturing and value-adding activities across the country’s 10 provinces,” the statement said.
“Priority will be given to funding areas that strengthen value chains that could lead to breakthrough innovative solutions to our nation’s industrialisation drive.”
Mr Tino Kambasha, NVCCZ chief executive, said in an interview that the funding facility, while utilising both debt and equity instruments, was largely structured to prioritise equity investment.
The Government, taking advantage of the strong links between its manufacturing and agricultural sectors, is placing a special emphasis on developing key value chains.
Special focus is being placed on low-hanging fruit for a structurally transforming economy. These include the fertiliser, soya, cotton, dairy, sugar, leather, iron and steel, and plastic waste value chains.
Industry and Commerce, Mangaliso Ndlovu told this publication in an interview in September that the Treasury had pledged continuous support for the fund, noting that the sustained backing was key for nurturing high-growth value chains within the manufacturing sector.
“We are happy that the Treasury has committed to consistently supporting the fund to aid high-growth value chains within the manufacturing sector until it is self-sustaining,” said Minister Ndlovu.
“It is a privately focused fund to support critical sectors, providing them with the financial and technical support needed for them to grow.”
Previously, Mr Kambasha said the fund would prioritise “high-impact projects” that align with the national agenda. To ensure effective management and prevent misuse, he said the fund would conduct thorough due diligence on all projects.
He added that resources will be deployed on a “drip-feeding basis” rather than as a lump sum. This staged disbursement was intended to ensure that funds are used for their intended purpose.
Mr Kambasha expressed his belief that the fund’s proper management would attract further investment from external partners, such as pension funds and development partners like the African Development Bank.
He also shared his vision for the future, suggesting that different specific funds for other sectors, such as mining, could be established under the National Venture Fund to create a diverse portfolio. – Herald
