Bank grants $206 million loan to Zimbabwe

The Development Bank of Southern Africa has provided a $206 million loan to Zimbabwe which is the largest single loan granted by the DBSA for a development project in that country.

The Development Bank of Southern Africa (DBSA) recently signed the three-way historic loan agreement with the Zimbabwe National Roads Administration (ZINARA), the Ministry of Transport, Communications and Infrastructural Development and the Ministry of Finance in Zimbabwe.

The development loan, the first tranche of US$54 million which has already been released, is earmarked for the rehabilitation of a major road artery spanning from Plumtree on its western border with Botswana, through Harare, to Mutare on the country's eastern border with Mozambique. This long east-west route spans 801 kilometers.

According to Nicholas Goche, Minister of Transport, Communications and Infrastructural Development the rehabilitation of these key arterial roads will not only streamline trade flows from and to Zimbabwe, but will reduce road maintenance costs, vehicle maintenance and operation costs, journey times, congestion and road accidents along this busy route.

Tendai Biti, Minister of Finance, pointed out that this road project will be a game changer, ushering in a new era of re-investment in the country's economic infrastructure, creating jobs and boosting economic efficiency. This particular road project alone will create some 800 skilled and semi-skilled construction jobs, and reflects the growing confidence of African and international investors in Zimbabwe's future.

Remarking on this historic loan, Jabu Moleketi, Chairman of the DBSA Board of Directors said the Bank's loan financing for this pioneering road rehabilitation project in Zimbabwe is a clear expression of South Africa's commitment to Zimbabwe's reconstruction and recovery effort, and regional economic integration. He added that the Bank is at an advanced stage in considering several other priority infrastructure projects.

This historic loan to Zimbabwe is the second biggest loan granted by the DBSA outside of South Africa and will give a much needed boost to Zimbabwe's transport sector.

In 2010, the Bank disbursed its first development loan of US$20 million for a revolving input credit scheme for small-scale Zimbabwean farmers through a cooperative business partnership that provides both credit and capacity building to some 127,000 growers on 242,000 hectares.

The Bank has continued to grow its international development financing, with new annual approvals recently reaching a record $1 billion, and annual disbursements rising sharply to $450 by end March 2011.