EIB lines of credit to local banks top €25m

The European Investment Bank (EIB) has pledged to continue supporting Zimbabwe’s lost Covid 19 economic recovery initiatives after the bank extended a combined €25 million (US$26,82m) in lines of credit to two local banks for lending to productive sectors.

Zimbabwe, like many countries globally, has suffered the ravaging impact of the pandemic, which disrupted global supply chains, negatively impacted access to finance, caused national shutdowns and limited travel.

Yesterday the EIB signed an agreement with NMB Bank in Harare for a €12,5 million (US$13,41m) line of credit, having agreed to extend a similar facility to First Capital Bank earlier on Tuesday this week.

Head of EIB regional representation for Southern Africa and Indian Ocean, Mr Jim Hodges, said the bank was willing to provide the necessary support that could help drive economic growth by capacitating the private sector.

One of the major challenges faced by Zimbabwe’s productive sectors is lack of access to affordable long-term funding. But Mr Hodges said the facility to FCB was an investment into the future of the country’s productive sectors.

The EIB resumed lending to local banks/companies last year after a 22 year absence, largely due to sanctions imposed on Zimbabwe by western countries over the last two decades, which constrained access to affordable external long term finance.

“We have been engaging with banks in the past years and what we are now seeing is the result of that process. The EIB is committed to working with local financial partners to enhance access to finance by Zimbabwean entrepreneurs and businesses.

“Unlocking investment is crucial to enable business expansion and address economic challenges worsened by Covid-19. The bank is pleased to provide €12,5 million of new targeted financing to NMB that will strengthen private sector investment, create jobs and accelerate the post-pandemic recovery of Zimbabwe.

“Today’s new agreement demonstrates how Europe and African partners are joining forces to back business growth,” he said.

The EIB agreed to provide a cumulative €40 million (US$42,92m) in lines of credit for Zimbabwe’s private sector and CABS was the first bank to access it after signing a €15 million (US$16,09m) credit line last year.

Head of Agriculture, Private Sector and Trade, European Union Delegation to Zimbabwe, Mr Bernard De Schrevel, said more support would be extended to the country’s private sector, which plays a critical role in job creation, food security and access to export markets.

NMB chief executive Mr Gerald Gore said the facility would target exporting companies of all sizes. Agriculture, mining and manufacturing are expected to benefit from the credit facility with a 7-year tenure.

“We want to capacitate our local companies that export. By doing so, they can become more competitive on both the regional and global markets.

“As a bank, we have been aggressive in funding agriculture in particular and this new facility from EIB complements these efforts. We are not just interested in lending to companies only, but looking at the impact on the economy, job creation, for instance,” he said.

Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya who was also present at the signing ceremony applauded the EIB for the credit lines extended to local banks as they will assist in economic growth allowing the country to meet the aspirations of the National Development Strategy (NDS1).

He added this will also help increase trade between Zimbabwe and Europe.-The Herald