$30 million facility for Agriculture Bank of Zimbabwe

The Industrial Development Corporation of South Africa has signed a $30 million facility agreement with Agricultural Bank of Zimbabwe, the parties said today.
The deal was arranged by SA's Musa Capital and Zimbabwe's Neverseez Capital and the signing took place on March 18.
This was the first transaction of its kind since the signing of the Bilateral Investment Promotion and Protection Act (Bippa) between South Africa and Zimbabwe in 2010, the statement said.
"Bippa seeks to create favourable conditions for investment between South Africa and Zimbabwe; provide security of tenure to South African investments in Zimbabwe; and unlock opportunities for the Zimbabwean local industry to access lines of credit from South Africa.
"In that context, the IDC Agribank deal is a significant step towards easing for the Zimbabwean financial services sector the liquidity constraints resulting from years of hyper-inflation and will, overall, assist in boosting economic activity in Zimbabwe," the statement added.
AgriBank said it would use the six-year term facility from the IDC to on-lend to its blue-chip and medium-sized clients, some of which were listed on the Zimbabwean Stock Exchange - with a focus on increasing their production capacity.
However, $20 million of the facility was allocated to firms who operated in the agri-business, manufacturing, and mining sectors while $10 million would be on-lent to the Industrial Development Corporation of Zimbabwe.
The loan was structured to ensure that a large portion of the funding would be used by Zimbabwean companies to purchase South African goods and services. "The IDC facility will, therefore, also provide revenue opportunities to South African firms," the parties said.
"Because it will help to induce productive capacity in several key sectors, we see the IDC facility as a watershed transaction," Zimbabwe's finance minister, Tendai Biti commented.
"It will also signal that Zimbabwe truly is open for business and that South Africa continues to play a supportive role in Zimbabwe's economic recovery."
Somkhosi Malaba, CEO of Agribank, agreed that the transaction was significant in addressing the disablement of the banking sector resulting from the past ten years of the country's economic history.
"Obtaining capital from sources such as the Afrieximbank, which has just provided US$70 million to the banking sector, and from institutions like IDC, will add momentum to the positive trend in Zimbabwe's economic recovery," Malaba said.
The IDC's divisional executive, resources sectors, Ufikile Khumalo said: "The financial services sector plays a critical role in any economy and, given the central role that Agribank has historically played inthe agricultural and industrial sectors, in enterprise development, and in job creation, IDC views this investment with optimism in respect of accelerating the progress of the Zimbabwean economy."