News / Local
Byo companies cry foul over stringent requirements for Dimaf
09 Feb 2012 at 10:50hrs | Views
BUSINESS association in Bulawayo have cried foul over what they termed stringent requirements for set for distressed firm in the city to meet before they qualify for the Distressed and Marginalised Areas Fund (DIMAF).
The associations said the conditions set are not conducive for distressed companies.
Companies are expected to benefit for the $40 million must have clean tax records, bankable business plans among other requirements.
Association for Business in Zimbabwe (ABUZ) chairperson Lucky Mlilo said city firms would stand to lose out as most of them do not have audited financial results for the past three years.
"The requirements that have been put in place by the bank are difficult especially for companies that are distressed, one of the requirements is that a company should have audited accounts for the past three years which really for a company that is distressed cannot afford to have their accounts audited. Some of the requirements are quite stringent," Mlilo said.
It has been learnt that collateral that is required is also too high.
Companies intending to apply for $100 000 need to produce collateral of $150 000.
Permanent secretary in the ministry of Finance Willard Manungo said the applicants and their directors must have clean tax records, sound credit rating and the companies must demonstrate that they can hav an impact in the revival of the country economy.
The government last year allocated $40 million under the Distressed and Marginalised Areas Fund for financially distressed companies in Bulawayo for the revival of companies which were facing collapse after years of an economic meltdown.
About 87 firms closed shop in Bulawayo leaving 20 000 jobless but the Dimaf is expected to bring relief to some of these entities.
Of the 85 closed companies, 19 are in the clothing and textiles, 63 in the motor and 3 under the construction sector while 5 companies were reported to be under judicial management.
The Government has projected that industries in the country will achieve 80 percent capacity utilization by the end of this year from last year's 57,59 percent.
Though the list of companies to benefit is still a secret, Archer Clothing in the Belmont industrial zone is earmarked to get funding.
Archer Clothing Company failed to open last week following its annual shutdown leaving bout 600 employees stranded.
The associations said the conditions set are not conducive for distressed companies.
Companies are expected to benefit for the $40 million must have clean tax records, bankable business plans among other requirements.
Association for Business in Zimbabwe (ABUZ) chairperson Lucky Mlilo said city firms would stand to lose out as most of them do not have audited financial results for the past three years.
"The requirements that have been put in place by the bank are difficult especially for companies that are distressed, one of the requirements is that a company should have audited accounts for the past three years which really for a company that is distressed cannot afford to have their accounts audited. Some of the requirements are quite stringent," Mlilo said.
It has been learnt that collateral that is required is also too high.
Companies intending to apply for $100 000 need to produce collateral of $150 000.
Permanent secretary in the ministry of Finance Willard Manungo said the applicants and their directors must have clean tax records, sound credit rating and the companies must demonstrate that they can hav an impact in the revival of the country economy.
The government last year allocated $40 million under the Distressed and Marginalised Areas Fund for financially distressed companies in Bulawayo for the revival of companies which were facing collapse after years of an economic meltdown.
About 87 firms closed shop in Bulawayo leaving 20 000 jobless but the Dimaf is expected to bring relief to some of these entities.
Of the 85 closed companies, 19 are in the clothing and textiles, 63 in the motor and 3 under the construction sector while 5 companies were reported to be under judicial management.
The Government has projected that industries in the country will achieve 80 percent capacity utilization by the end of this year from last year's 57,59 percent.
Though the list of companies to benefit is still a secret, Archer Clothing in the Belmont industrial zone is earmarked to get funding.
Archer Clothing Company failed to open last week following its annual shutdown leaving bout 600 employees stranded.
Source - Byo24News
