CZI’s US$200m funding facility now open
THE Confederation of Zimbabwe Industries (CZI) says local firms can start applying for loans under the US$200 million funding facility the industrial lobby group structured in partnership with a continental financier, which was launched last week.
According to CZI, the funding is meant to bankroll Zimbabwean companies, mostly its members, but also approved non-members, for the acquisition of raw materials and procurement of equipment in the manufacturing sector.
The facility, which was negotiated between CZI and Loita Capital Group, a pan African financial institution headquartered in Mauritius, was launched by Finance and Economic Development Minister Professor Mthuli Ncube during the industry body’s three-day annual conference that ended in Harare last Friday.
Exchange control officials from the Reserve Bank of Zimbabwe were also involved in structuring the facility.
Applications for the funding under the facility will be made through an online trading platform administered by Loita Capital.
Over the years, the local manufacturing sector has had a strong appetite for funding to facilitate various programmes such as retooling.
It is in this context that the Government has also chipped in with financing options such as the economic stimulus packages for various sectors and the planned US$15 million retooling package, which funded from the US$960 million Special Drawing Rights the International Monetary Fund (IMF) disbursed to Zimbabwe last year.
In an interview, CZI president Mr Kurai Matsheza said the interest rates for the Loita Capital facility, which was mainly for their members as well as start-ups and Small-to Medium Enterprises (SMEs) would be tenure-driven.
“Basically, it’s tenure-driven in terms of rates as they say they vary from maybe at the highest its six months LIBOR (London Interbank Offered Rate) plus maybe a factor of maybe seven.
“They look at an average of six months for LIBOR to say what it has been, and they add at the top end and then from that top end it can come down,” he said.
LIBOR is a benchmark interest rate at which major global banks lend to each other in the international interbank market for short-term loans.
Under the LIBOR benchmark, interest rates are usually lower than five percent. Mr Matsheza added: “Obviously you have got to be a CZI member for you to be able to access the funding, but for small guys (start-ups and SMEs) there can be a waiver.
“We don’t want that (not being affiliated to CZI) to be restrictive measures so even those who are not members we will facilitate for them to get the funding.”
Prospective beneficiaries of the US$200 million funding kitty are required to register on the platform and can immediately start submitting their applications through to the Loita online trading platform.
“If there is anything that is required in terms of recommendation, we will give the recommendation.
“But this is driven by each individual member in terms of your trading record, what you have been doing for the past whatever period it is, then it’s a digital platform where people apply.
“Obviously, it goes backward and forward and you may not qualify now but I am sure over time you will qualify,” said Mr Matsheza.
Speaking at the launch event last week, Loita Capital chairman and chief executive officer Mr Justin Chinyanta said his organisation has since its inception in 1992 processed transactions worth US$500 million in Zimbabwe and about US$6 billion in Africa.
“We were set up in 1992 by the Hong Kong and Shanghai Bank as a structured finance arm for Africa; subsequently the institution was taken over by management.
“And since then, we have done about US$6 billion worth of transactions across Africa.
Here in Zimbabwe specifically we have done US$500 million worth of transactions,
working with your Central Bank.
“The most recent transaction we did was a few years ago when we did a mineral export
for a US$100 million facility,” he said.
“The reason why we are here (CZI annual conference), is that we have got our trading
platform, and part of the concept behind that trading platform is that we have also
embedded a financial model into it which will help importers and exporters in their
funding requirements.
“And the target initially is for the US$200 million which will be split between trade and
investment.”
Mr Chinyanta commended the local industrialists for showing professionalism in their
previous transactions with Loita Capital.
“It is our delight and pleasure that in Zimbabwe most of the folks that we have worked
with have tended to be very professional especially in the export sector, we did a lot of
tobacco export financing.
“More importantly, going forward one of the things that we want to do is to make sure
that we use the platform on a national level to enhance the access to the international
markets by both your importers and exporters as well as ensuring that price discovery to
a large extent in terms of the various prices that are obtaining out there can also be
accessed transparently,” he said.
In a separate interview, Shepco Industries group chief executive officer Mr Shepherd
Chawira who is also the immediate past president of the Matabeleland Chamber of
Industries, said as industrialists they were excited by the launch of the US$200 million
facility.
“We are very excited, it was really the highlight of this year’s CZI conference and we see
that it’s going to be a game changer.
“And we are quite excited about our organisation (CZI) that finally as a private sector, we
have got to find means and ways of re-capitalising and retooling as well as how best we
can grow our industry.
“We are really following up and seeing how best we can tap into it; the US$15 million
from the Government is too little but it also goes a long way in helping us to retool and
recapitalise,” he said.-The Herald
