Zimbabwe’s largest rose exporter, Luxaflor Roses, has taken a loan to procure raw materials.
The loan is supported by a Government guarantee gazetted on Friday 30 April 2021.
According to the notice, Finance Minister Professor Mthuli Ncube said ” It is hereby notified, in terms of section 300 (3) of the constitution of Zimbabwe, that the Minister of Finance and Economic Development hereby issued the following : Guarantee, binding the Government of Zimbabwe as surety for the repayment of US$750 000,00 (50% of the facility) to Luxaflor Roses (Private) Limited loan from CBZ Bank Limited to finance the procurement of raw materials for the production and export of roses under Covid-19 Economic Recovery and Stimulus Package”.
This is part of the Z$18 billion Covid-19 support package for local businesses announced by President Emmerson Mnangagwa in May 2020, whereby industries could assess Bank loans of up to Z$2,5 billion under the Government of Zimbabwe for working capital. This means that should the companies that have been granted facilities under the Government guarantee default, the lending banks will collect the guaranteed amount from the Government.
Despite this being an attractive package with a three-month grace period and maximum 20 percent interest rate, there has been a low uptake by companies, with Luxaflor Roses (Private) Limited getting the US$750 000,00 and Mbano, a hotelier accessing a partial loan of the Z$500 million allocated for tourism support.
The ZWL$18 billion package (9% of GDP) was intended to reinvigorate the economy, with the agricultural sector allocated the lion’s share of ZWL$6.08 billion and industry also being prioritised with an allocation of ZWL $3.02 billion for working capital purposes.
At a meeting in March 2021, the Employers Confederation of Zimbabwe requested Government for a second Covid-19 Economic Recovery and Stimulus cash package, although there had been a low uptake of the first one.