Opaque Zimbabwe govt $18bn stimulus irks business

BUSINESS and labour are in the dark over the distribution of a ZW$18 billion (US$219,5 million) stimulus package announced by government three months ago to ameliorate the impact of the Covid-19 pandemic, amid concerns about the impact of inflation as well as revelations that the initiative had not reached struggling industries.

The stimulus package, which was announced by President Emmerson Mnangagwa on May 1, is meant to assist all productive sectors by ensuring they revive operations and maintain jobs. It was designed to mitigate the effects of the Covid-19 pandemic, which has resulted in hundreds of thousands of fatalities globally, while also helping business following losses from the resultant national lockdown which was imposed by government on March 30.

The ZW$18 billion stimulus package consists of agriculture support (ZW$6,08 billion), Working Capital Fund (ZW$3,02 billion), Mining Sector Fund (ZW$1 billion), SME Support Fund (ZW$500 million), Arts Sector Fund (ZW$20 million), Liquidity Release from Statutory Reserves (ZW$2 billion), Health Sector Support Fund (ZW$1 billion), Broad Relief Measures (ZW$1,5 billion) and Food Grant (ZW$2,40 billion).

Zimbabwe Congress of Trade Unions secretary-general Japhet Moyo said labour and business demanded at their last tripartite negotiating forum meeting to know from government the details of how the bailout package had been distributed and to whom.

“During the TNF, we discussed the containment measures of Covid-19 besides testing and World Health Organisation guidelines. Business and labour wanted to find out who had benefited from the stimulus package; whether it was through the banks, the Reserve Bank of Zimbabwe or another channel,” Moyo said.

“Our fear is that the money will end up with someone who does not even have a company just as what happened during the farm mechanisation programme where individuals without farms got farming implements. We as labour want that money to go to companies so that it saves jobs.”

He said they are still awaiting a comprehensive response from government as to how the funds have been disbursed.

Moyo said there is need for the timeous distribution of the stimulus package given the depreciation of the local unit as a result of runaway inflation, which has since surpassed the 700% mark.

“Inflation might dampen the effectiveness of the stimulus package. If there is a delay in the distribution of the money under the package, it will be of little value as it would have been decimated by inflation,” Moyo warned.

Zimbabwe National Chamber of Commerce chief executive Chris Mugaga said none of its members have benefited from the stimulus package.

“We have received nothing. Nothing at all! I don’t even know if the sum exists,” Mugaga said.

Employers Confederation of Zimbabwe president Israel Murefu said they are still consulting among their members to establish who benefited from the stimulus package.

“I do not know of anyone who has received the stimulus package. We have asked our office to do some research and check with the Bankers Association of Zimbabwe and Confederation of Zimbabwe Industries (CZI) to find out if anyone has benefited,” Murefu said.

He said part of the package is in the form of guarantees which would not help distressed companies much as they desperately need liquidity to keep them afloat.

CZI president Henry Ruzvidzo said industry has met Finance minister Mthuli Ncube over the stimulus package.

“There are some who say they have received it but it is not a lot of companies who have accessed it. We have raised the issue with the minister. There are challenges on the government side,” Ruzvidzo said.
He said government needs to strike a balance of giving funding to distressed companies and avoiding a situation whereby it would worsen inflationary pressures.

“We are not happy, but one has to understand the constraints government is working under,” Ruzvidzo said.

Source – The Independent

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