HomeBusinessZimbabwe lures Afreximbank

Zimbabwe lures Afreximbank

Government has given the African Export-Import Bank (Afreximbank) land to build its regional offices as the country strengthens relations with the Cairo-headquartered lender.

BY TATIRA ZWINOIRA

This comes after a visit to the country last week by Afreximbank president Benedict Oramah to help Zimbabwe resolve the biting liquidity crunch and to review previous lines of credit advanced to Zimbabwe.

Analysts say that the financial sector needs a cash capital injection of at least $5 billion to resuscitate the economy and pump money into crucial sectors of the economy.
Finance minister Patrick Chinamasa on Tuesday presented papers for the land at a dinner hosted for Oramah by FBC Bank.

“As we love Afreximbank so much and want them to be in Zimbabwe, we decided as government to donate to them a stand on which they can put up their headquarters. It is stand number 1927 Harare Township and measures 1, 2 hectares, which is a lot of land,” Chinamasa said.

After accepting the land, Oramah said he would ensure that the regional office was ready within two years.

“I promise we will not take more than two years to build that office. We will take one year to do it. This is because Zimbabwe is important to us and we want to do some of the things the honourable minister [Chinamasa] mentioned,” Oramah said.

“We have been here in Zimbabwe since 1997. It is not normal that for almost 20 years we are yet to have our own home. We want to be responsible people, so we want to show the Zimbabwean people and government that we are not briefcase bankers.”

He said Zimbabwe was one of the founding members of Afreximbank and the bank had contributed an initial capital injection of $30 million. He pledged the bank’s commitment to do more transactions with Zimbabwe.

Afreximbank has been one of the country’s few financiers providing lines of credit that total $4 billion since 2009.

On average, Afreximbank has been giving lines of credit of up to $500 million per annum to Zimbabwe through various financing channels. As of January 2016, lines of credit for 2015 stood at $504,08 million.

Afreximbank entered into an agreement with the Export-Import Bank of China (China EximBank) to provide a $1 billion support for intra African trade, specifically industrial parks and special economic zones.

Chinamasa said the legal framework to establish the special economic zones was already before Parliament and he hoped that it would have sailed through by mid-year.

Government and Afreximbank will set up a nostro stabilisation fund to help boost the liquidity situation.

The facility would provide banks with hard cash to avert the liquidity crisis.

Afreximbank also provided the interbank facility through the Afreximbank Trade Debt Backed Securities that began operations last year with an initial pool of $100 million to help in the distribution of liquidity in the banking sector. The facility has now grown to $178,8 million as of December 31 2015.

Central bank chief John Mangudya said the interbank facility led to rapid improvement in the banking sector profitability.

“A commendable aggregate net profit of $127,47 million was recorded by the financial sector for the year ended December 31 2015. A total of 15 out of the 18 operating banking institutions recorded profits. With the introduction of the interbank facility, total banking sector deposits grew by 11,2% to $5,6 billion and loans amounted to $3,9 billion as at December 31 2015,” Mangudya said.

Other contributions by Afreximbank include a $200 million grain import facility to the Grain Marketing Board, finance towards Zesa’s electricity imports from Mozambique, and the $50 million backed bond coin facility.

Part of the recent deals between government and Afreximbank include a $150 million gold finance facility towards production of gold output of 24 tonnes by year end from last year’s 20 tonnes.

Afreximbank has also unveiled a $100 million Arda Finance Facility that will go to the Agricultural Rural Development Authority to increasing agriculture production in the coming months, especially irrigation rehabilitation and expansion.

Afreximbank also helped with a $819 million bridge facility for external arrears clearance to the African Development Bank ($601 million) and the World Bank’s International Development Association ($218 million).

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