HARARE-- The African Development Bank (AfDB) has signed a 25 million US dollars loan agreement with the Central African Building Society (CABS), Zimbabwe's biggest housing society, for on-lending to productive sectors of the economy in what could be the harbinger for lines of credit which
have been closed over the past two decades.
The loan has a tenure of three and half years. Officials were not keen to disclose the interest rate at which the continental bank loaned the funds to CABS.
AfDB country manager Damoni Kitabire said the loan agreement signed here Wednesday marked the beginning of a new chapter for the bank and the Zimbabwean private sector, which has struggled over the years to access long term funding, but showed its resilience in the face of a string of challenges.
This facility will be used to provide medium term foreign currency liquidity specifically for trade finance purposes, said Kitabire. It is our hope that this intervention will complement the government of Zimbabwe's current efforts which seek to revitalize the economy by among other interventions, improving access to affordable credit for small to medium enterprises whilst supporting the country's economic transformation.
The Governor of the Reserve Bank of Zimbabwe (RBZ), Dr John Mangudya, said the facility came at a vital time to support the local industries efforts to re-tool and improve competitiveness.
Zimbabwe has been starved of medium to long term financing for a long time, he said, adding that the local industry required over 400 million USD for re-tooling. The 25 million USD go a long way towards covering that gap.
CABS managing director Simon Hammond said the facility would boost the local industries capabilities to earn foreign currency. Due to the prevailing economic conditions, long term deposits have been scarce, as local investors have been skewed towards short term and transitory deposits, Hammond said.
This credit line which is a three and half year facility, brings with it stability of medium to long term funding.
Source: NAM NEWS NETWORK