Afreximbank to avail more credit to Zimbabwe

By The Standard | Jun. 2, 2013

THE African Export-Import Bank (Afreximbank) says it is ready to disburse to Zimbabwe additional lines of credit on the country’s limit.

Report by Ndamu Sandu

Afreximbank has been the country’s all-weather friend, helping with lines of credit necessary in reviving capacities in the local manufacturing industry.

Denys Denya, the bank’s executive vice-president in charge of Finance, Administration and Banking Services, told Standardbusiness the appetite for risk was in line with Afreximbank’s thrust to fill the gaps in member countries’ markets.

“Given the total country limit there is room for us to disburse another US$200 million,” Denya said on the sidelines of the African Development Bank annual meetings.

Last year, the bank annou-nced that it would avail lines of credit to Zimbabwe of between US$700 million and US$800 million in 2013.

Denya said the bank’s new thrust would be talking to individual companies to “manage risk and reach a level of understanding, which will enable you to help them not only for one year but for the long-term”.

“Previously our facilities were normally 12 months but we have moved to three years. There is room to move because the upper limit of our facility is seven years and Zimbabwe definitely needs medium-term facilities but we need an enabling environment to be in place for us to do that,” the Afreximbank executive said.

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Denya said the bank was bullish about the Zimbabwean economy, but that there was need for regulatory changes to attract more lines of credit into the economy.

“Obviously the regulatory environment needs to change to be more enabling, protection of property rights that enables us to bring international financiers with us to finance the gap that is in Zimbabwe. Zimbabwe’s exports are not sufficient to provide the necessary foreign currency to import the needed that you need to retool,” he said.

Zimbabwean companies are in desperate need of long-term financing to replace antiquated equipment and machinery, some of which is more than 50 years old.

However, the country’s perceived risk profile has made it difficult to attract lines of credit. Zimbabwe cannot get funding from the International Monetary Fund (IMF) due to an outstanding US$140 million debt.

Other potential financiers have taken a cue from the IMF, largely considered as the world’s financial Commissioner of Oaths.

Concerns have also been raised on the implementation of the empowerment laws prospective investors have equated to expropriation.

Reserve Bank of Zimbabwe governor Gideon Gono and Youth Development, Indigenisation and Empowerment minister Saviour Kasukuwere are at odds over the implementation of the empowerment policy on the banking sector.

Kasukuwere says the sector should be indigenised as per law. Gono argues that the one-size- fits, all approach does not work especially when dealing with the delicate banking sector — the nerve centre of the economy.

Together with the Ministry of Finance, Afreximbank funded the Zimbabwe Economic Revival Trade Facility (Zetref) that offered cheap loans for companies meant for retooling.

Denya said the bank is in discussions with government on another facility.

“We are still negotiating with the authorities. Our appetite is large, there is no reason why we can’t have Zetref II,” he said.

Afreximbank had proposed the introduction of a financial instrument to be used as collateral in interbank placements by banks.

The instrument would play a part in the distribution of liquidity from those that have excess funds to players facing some shortages.

It has meant other instruments to be introduced by government. However, government did not consider the proposal and opted for an alternative route.

Despite government’s move, Afreximbank said the doors were not closed for Zimbabwe if it has a change of heart.