THE European Development Fund (EDF) will return next year after being halted in 2002 at the onset of restrictive and targeted sanctions imposed on Zimbabwe by the European Union (EU).
This was revealed by Industry and Commerce minister Mike Bimha when he officially opened the Confederation of Zimbabwe Industries (CZI) congress in Bulawayo yesterday.
“We have been informed, though without official confirmation, that the funding will be returned in 2014 under the EDF11,” Bimha said.
The EU and its member states have provided $1,3 billion in development assistance to Zimbabwe since 2009 and resumption of EDF is expected to boost funding for recapitalisation of industry which has been under severe stress due to financial constraints.
According to the CZI’s 2013 manufacturing survey released recently, industry capacity utilisation plunged to 36,6% largely due to erratic power supplies and cheap imports from foreign markets rendering the local industry uncompetitive.
Bimha said the government had achieved little in terms of provision of development finance to fund the resuscitation and establishment of new industries.
He said lenders of developmental finance such as the World Bank, through its subsidiaries the International Finance Corporation and the International Bank for Reconstruction and Development, have not been lending to Zimbabwe for the past decade.
“The only meaningful development assistance that is affordable at London Interbank Offered Rate-aligned interest rates of more than 2% has been accessed from China,” Bimha said.
However, Bimha said the $1 billion fund was a drop in the ocean compared to industry’s minimum requirement of $10 billion.
Regionally and locally, the $100 million Zimbabwe Economic and Trade Revival Fund and the $40 million Distressed Industries and Marginalised Fund (Dimaf) have recorded a low uptake largely due to high interest rates.
Despite 60% of the projects being approved, less than 25% of the Dimaf disbursement has so far been achieved. Economic analyst Eric Bloch said Zimbabwe’s industry has enormous potential to recover should government implement investor-friendly policies.
“If we do our things right, the country has the potential to become the fifth biggest economy in Africa by 2020,” Bloch said.