News / Local
European Investment Bank warms up to Zimbabwe
02 Jun 2022 at 09:04hrs | Views
The European Investment Bank (EIB) has availed about €40m to Zimbabwe banks within a year, which will go towards bailing out the country's SMEs and mid-cap companies, in a vote of confidence in the country's financial institutions.
Yesterday, EIB signed a deal to avail €12.5m to NMB Bank in the capital Harare.
This followed a similar deal signed with First Capital Bank on Tuesday this week. The loan facilities have a tenure of seven years.
Last year, EIB availed €15m to CABS, becoming the first ever partnership with a Zimbabwe bank in 22 years.
Speaking at the signing ceremony held in Harare on Wednesday, Agriculture, Private Sector and Trade, European Union Delegation to Zimbabwe head Bernard De Schrevel said the facilities are a vote of confidence in local financial institutions.
"The EIB's engagement with Zimbabwe's financial institutions like NMB and First Capital Bank is a sign of confidence in Zimbabwe's financial institutions that have demonstrated more sustainable credit performance and prudent policies over the years," De Schrevel said.
De Schrevel said there is no economy without lending and the facility represents how lending is important to economic resilience and growth "which is why this year's EIB investment facilities of First CapitalBank and NMB are similar packages implemented in Zimbabwe in 2021 through Cabs".
The facilities, he said, address one of the key bottlenecks in doing business in Zimbabwe which is access to finance. Local companies have been struggling to access patient capital at a lower cost as the foreign currency auction has failed to meet their needs.
Local companies require capital for retooling to become competitive.
De Schrevel said the long tenure of the facilities will provide longer term investments by private companies therefore contribute to faster and more resilient post pandemic economic recovery in Zimbabwe.
He said the presence of the European Investment Bank in Zimbabwe therefore contributes to a "coherent and long standing partnership between the European institutions and EU member states as a team to work together for inclusive development".
De Schrevel said the support to the private sector and enterprises creates an opportunity that has a significant impact on the lives of many citizens and indeed the private sector plays an important role in terms of employment and access to export markets.
Reserve Bank of Zimbabwe governor John Mangudya said the loan facilities show confidence that EIB has in the country.
"We appreciate the confidence that has been imposed on Zimbabwe by EIB through this and other facilities. This facility is going to generate employment, export economic diversity and consequently more sustainable economic growth which is in line with the country's aspirations under the National Development Strategy 1," Mangudya said.
"Private sector development is critical in growing and diversifying the Zimbabwean economy, creating opportunities for youth employment, growing the SMEs, growing exports, growing public finance, revenues and expanding the economy."
Mangudya added: "This facility from EIB is essential for developing the economy and reducing pressure on the foreign exchange auction system."
The central bank hopes that this facility continues to increase the trade between EU and Zimbabwe and that it will significantly boost the bank's balance sheet while at the same time providing appropriate development finance for its customers.
Mangudya said: "We expect overdrafts to be for working capital and this term facility to be developmental finance for developing companies and your customers. So we are happy that this facility is focusing more on exports so as to enhance foreign currency in this country".
Regional representative Southern Africa and Indian Ocean of the EIB head Jim Hodges said the deal will help accelerate Zimbabwe ‘s recovery post Covid-19 pandemic.
"The EIB is committed to ensuring that Zimbabwe entrepreneurs and businesses can invest through new cooperation with local financial partners. As part of Team Europe, the EIB is pleased to provide €12.5m of targeted financing to First Capital Bank to accelerate private sector investment, create jobs and accelerate the post pandemic recovery of Zimbabwe," Hodges said.
Finance and Economic Development permanent secretary, George Guvamatanga said: "We applaud collaborative efforts such as this as they raise our profile as a nation and contribute significantly to our economic development."
Speaking at the signing ceremony held in the capital Harare on Tuesday, First Capital Bank Limited's commercial director, Mutemwa Ushewokunze said the deal will "unlock a lot of opportunities within key sectors in our economy".
"This partnership will address a challenge that has often prohibited the growth of many businesses, the unavailability of correctly priced long- term funding. Our primary focus is to avail funding to key productive sectors that will drive our economy forward. These are agriculture and manufacturing to name a few."
NMB CEO, Gerald Gore said the facility comes at very "generous terms" and its target market is exporting companies whether they are SMEs and mid cap firms which generate foreign currency "because NMB has to pay in foreign currency in order to repay the facility".
"The tenure is seven years and one of the longest facilities that we have got. It allows us to offer short- term working capital or medium to long term capital expenditure to our exporting entities. So whether they want to set up production facilities and acquire new technologies the facility will be available to support that," Gore said.
NMB is confident that this facility will capacitate their exporting entities so that they will be competent with any other company globally.
"When they go out there they can stand toe to toe with any company from anywhere because it's a global village. NMB will look into agriculture, horticulture and manufacturing concerns which are export oriented."
Yesterday, EIB signed a deal to avail €12.5m to NMB Bank in the capital Harare.
This followed a similar deal signed with First Capital Bank on Tuesday this week. The loan facilities have a tenure of seven years.
Last year, EIB availed €15m to CABS, becoming the first ever partnership with a Zimbabwe bank in 22 years.
Speaking at the signing ceremony held in Harare on Wednesday, Agriculture, Private Sector and Trade, European Union Delegation to Zimbabwe head Bernard De Schrevel said the facilities are a vote of confidence in local financial institutions.
"The EIB's engagement with Zimbabwe's financial institutions like NMB and First Capital Bank is a sign of confidence in Zimbabwe's financial institutions that have demonstrated more sustainable credit performance and prudent policies over the years," De Schrevel said.
De Schrevel said there is no economy without lending and the facility represents how lending is important to economic resilience and growth "which is why this year's EIB investment facilities of First CapitalBank and NMB are similar packages implemented in Zimbabwe in 2021 through Cabs".
The facilities, he said, address one of the key bottlenecks in doing business in Zimbabwe which is access to finance. Local companies have been struggling to access patient capital at a lower cost as the foreign currency auction has failed to meet their needs.
Local companies require capital for retooling to become competitive.
De Schrevel said the long tenure of the facilities will provide longer term investments by private companies therefore contribute to faster and more resilient post pandemic economic recovery in Zimbabwe.
He said the presence of the European Investment Bank in Zimbabwe therefore contributes to a "coherent and long standing partnership between the European institutions and EU member states as a team to work together for inclusive development".
De Schrevel said the support to the private sector and enterprises creates an opportunity that has a significant impact on the lives of many citizens and indeed the private sector plays an important role in terms of employment and access to export markets.
Reserve Bank of Zimbabwe governor John Mangudya said the loan facilities show confidence that EIB has in the country.
"We appreciate the confidence that has been imposed on Zimbabwe by EIB through this and other facilities. This facility is going to generate employment, export economic diversity and consequently more sustainable economic growth which is in line with the country's aspirations under the National Development Strategy 1," Mangudya said.
"Private sector development is critical in growing and diversifying the Zimbabwean economy, creating opportunities for youth employment, growing the SMEs, growing exports, growing public finance, revenues and expanding the economy."
Mangudya added: "This facility from EIB is essential for developing the economy and reducing pressure on the foreign exchange auction system."
The central bank hopes that this facility continues to increase the trade between EU and Zimbabwe and that it will significantly boost the bank's balance sheet while at the same time providing appropriate development finance for its customers.
Mangudya said: "We expect overdrafts to be for working capital and this term facility to be developmental finance for developing companies and your customers. So we are happy that this facility is focusing more on exports so as to enhance foreign currency in this country".
Regional representative Southern Africa and Indian Ocean of the EIB head Jim Hodges said the deal will help accelerate Zimbabwe ‘s recovery post Covid-19 pandemic.
"The EIB is committed to ensuring that Zimbabwe entrepreneurs and businesses can invest through new cooperation with local financial partners. As part of Team Europe, the EIB is pleased to provide €12.5m of targeted financing to First Capital Bank to accelerate private sector investment, create jobs and accelerate the post pandemic recovery of Zimbabwe," Hodges said.
Finance and Economic Development permanent secretary, George Guvamatanga said: "We applaud collaborative efforts such as this as they raise our profile as a nation and contribute significantly to our economic development."
Speaking at the signing ceremony held in the capital Harare on Tuesday, First Capital Bank Limited's commercial director, Mutemwa Ushewokunze said the deal will "unlock a lot of opportunities within key sectors in our economy".
"This partnership will address a challenge that has often prohibited the growth of many businesses, the unavailability of correctly priced long- term funding. Our primary focus is to avail funding to key productive sectors that will drive our economy forward. These are agriculture and manufacturing to name a few."
NMB CEO, Gerald Gore said the facility comes at very "generous terms" and its target market is exporting companies whether they are SMEs and mid cap firms which generate foreign currency "because NMB has to pay in foreign currency in order to repay the facility".
"The tenure is seven years and one of the longest facilities that we have got. It allows us to offer short- term working capital or medium to long term capital expenditure to our exporting entities. So whether they want to set up production facilities and acquire new technologies the facility will be available to support that," Gore said.
NMB is confident that this facility will capacitate their exporting entities so that they will be competent with any other company globally.
"When they go out there they can stand toe to toe with any company from anywhere because it's a global village. NMB will look into agriculture, horticulture and manufacturing concerns which are export oriented."
Source - businessdaily.co.zw
