NewsWe Investigate

Bulawayo businesses reel as govt dithers over reconstruction loans

ALMOST six months after the government promised to help revive Bulawayo businesses that were vandalised during the January protests against steep increases in fuel prices, shop owners are still struggling to access loans they were promised, investigations have revealed.

Bulawayo was the worst affected by the vandalism, as shops, particularly in high-density suburbs such as Entumbane and Nkulumane, were razed to the ground.

In its assessment, the government said the damage to businesses countrywide was worth RTGS$24,5 million and the Industry ministry at the time promised to provide RTGS$30 million to help shop owners to restock through the Emergency Business Relief Fund.

Only 25 companies out of 200 had received loans by the end of April amid fears that the money would be worthless by the time the rest benefit as the value of the local currency is fast losing value against the United States dollar.

The beneficiaries are expected to repay the loans within three to six months, attracting a concessionary interest rate of 4% per annum.

Businesses that lost equipment would be charged an interest rate of 3% per annum and have 12 to 24 months to repay.

Those whose business premises were destroyed during the protests were expected to receive funding at a concessionary rate of 2% per annum and they have up to 15 months to repay the loans.

A shop owner in one of Bulawayo’s high-density suburbs, who requested to remain anonymous fearing victimisation, said the process of getting the loans was cumbersome and was taking too long.  

He said while the application process itself was smooth, the long wait was frustrating and there were no updates from the government.

“After obtaining reference numbers for our applications, we still have to wait for payment for our stock, which the government says will be done directly to suppliers,” the businessman said.

The businessman said they were not given any time frames for the loan disbursements, which means they cannot plan.

“The greatest problem we are facing at the moment is that there are no specific time frames of when the government is going to make the deposits into the suppliers’ accounts,” he said.

“The suppliers themselves seem sceptical of the whole process, which is why they are insisting on the money being transferred into their accounts first before they can release the stocks to us.”

The businessman’s other worry was that when the money is eventually released, he like others would have lost their market share.

He said, already vendors were gaining a foothold on the market, as they supplied residents with basic commodities.

“We are slowly losing our customers and that is pushing us out of business,” the frustrated entrepreneur said.  

“Considering the rate of inflation, we may not be able to bounce back into business.”

The business environment has deteriorated rapidly since the January protests, with prices of basic commodities shooting through the roof.

Salaries of most workers, however, have remained stagnant and this has eroded disposable incomes.

The cost of building materials has also gone up significantly, with most suppliers now charging in foreign currency, a development that might put paid to hopes by some of the business people that they would use the government loans to refurbish shops that were burnt down by looters.

“Prices keep going up every now and then,” the shop owner said. “Imagine those whose infrastructure and equipment was destroyed or stolen.

“It will be difficult to reclaim their market share and meet the time frame for paying back the loans.”

Bulawayo Provincial Affairs minister Judith Ncube blamed bureaucracy for delays in the disbursements of loans, saying the city had a large number of people that were seeking loans to either restock of refurbish their business premises.

Ncube said the processing of loans involved people in Bulawayo and the Industry ministry’s headquarters in Harare.

She said some businesspeople delayed submitting their applications, resulting in the delays.

“We have received quite a substantive number of applications from the business people and I can confirm that there are some who have started receiving their stock depending on when they made the applications,” Ncube said.

“Some delayed in responding to government’s call and they are still in the process of submitting their applications, hence, they are waiting for their paperwork to be processed.”

Ncube said funding for equipment and refurbishment of buildings would take longer because some of the materials would have to be sourced from outside the country.

“Some of the materials needed here are not produced locally, hence, the government needs to secure suppliers first,” the minister added.

“For example, computers that were vandalised or stolen, would be sourced from outside the country and the government needs to scout for suppliers.

“This process will take a bit longer than that for restocking.

“However, the initial process of having affected people making applications has already started.

“We will forward their paperwork to Harare to the ministry, where the process of purchasing the equipment will be administered.

“As for the sourcing of building materials, there are other parties that need to be involved such as the Public Works Department. It is something that will take a fairly lengthy period of time.”

Meanwhile, Affirmative Action Group’s Matabeleland chapter president, Reginald Shoko said extending loans to affected businesses was noble, but the delays in releasing the money were undermining those efforts.

He said since the loans would be eroded by inflation, as the RTGS was on a free fall against the US dollar.

The local currency, which was introduced in February when the Reserve Bank of Zimbabwe abandoned the 1:1 threshold, now trades at 1:8 on the parallel market.  

“We need to understand these loans are being issued as RTGS dollars and this on its own is a huge problem because the currency’s value erodes every now and then.

“Considering that these loans are taking too long to go to the business people, they would have hugely devalued by the time they become accessible,” Shoko said.

“The government could have at least considered loaning out stocks instead of giving out RTGS loans.

“If that had happened, the business people would have had enough stocks.

“At the moment, by the time the loans come through, the money would not be enough to buy stocks taking into consideration the inflation rate.”

The AAG boss said business owners would also be hit hard by inflation even after the restocking.

“It would be difficult for them to price their goods considering the current business environment,” he said.

“These people are not the only ones in business. There are vendors, who now have access to every basic commodity.

“The vendors are not worried that much about pricing because they do not have rentals to take care of and council bills.

“At the end of the day, business people lose their customers to vendors.”

Shoko said there is need for transparency in the disbursement of the funds.

“We need to know how they evaluate who accesses the loans and how much the beneficiaries will receive.

“The government needs to be transparent about how they determine who receives what and how they will avoid situations where there will be complaints of other business people given preferences over others,” he said.

Shoko said the RTGS$10 million the government has disbursed so far was not enough.

“Right now, this money may seem to be a lot, but we still have to consider the ever-escalating inflation,” he said.

“At the pace at which the money is being deposited to the respective suppliers, some are going to access it at a time when it would have seriously devalued.

“This will result in the business people having a burden to pay back loans that did not assist them much.”

A total of 620 people were arrested in Bulawayo for allegedly looting shops and destroying property during the protests.

President Emmerson Mnangagwa deployed the army to quell the protests, leading to gross human rights violations, activists said at the time.

There were also reports that some sections of the security forces had a hand in the looting, as some soldiers were shot in Bulawayo while allegedly leading groups of looters.


Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button