Old Mutual to relax DIMAF requirements

Published: 02 July 2014

Struggling companies that have been failing to meet requirements to access the Distresses Industries and Marginalised Areas Fund (DIMAF) will be relieved following indications that Old Mutual has agreed to relax conditions.

The Old Mutual-managed fund (and disbursed through CABS) was designed to address the capital constraints faced by local businesses.

However, the majority of smaller firms have been failing to access the funds due to what they termed "stringent requirements" such as high collateral and published financial statements for the past five years among others.

Minister of Industry and Commerce Mike Bimha told the Parliamentary Portfolio Committee on Trade and Industry Wednesday morning: "We have engaged Old Mutual or CABS to consider relaxing some of the terms of DIMAF and they have agreed and that is a starting point."

Minister Bimha has also came out and acknowledged that Government failed to honour is obligation to contribute $20 million to the DIMAF facility.

"Government and Old Mutual were both supposed to commit $20 million each to DIMAF, but while Old Mutual contributed its $20 million, Government is still to honour its pledge. As a matter fact Old Mutual has contributed in excess of its pledge having put in $27 million to date."

Companies, mainly in the manufacturing sector, remain under pressure from tight liquidity with significant levels of company closures coming against a backdrop of declining industrial capacity utilisation, which worsened to an average of 39.6% in 2013 from 44.9% in 2012.

In terms of disbursements to date, Minister Bimha said the $27 million had all been drawn-down and "only 48 companies had benefited", with 26 of these companies in Bulawayo and the balance of them distributed among the other provinces.

Minister Bimha said efforts are currently underway to enlarge the fund as the Government together with Old Mutual had approached a number of financial institutions both locally and in the region.
- BH24