EU urges Zimbabwe firms to come up with bankable projects

The European Union (EU) ambassador to Zimbabwe, Jobst von Kirchmann, has called on local businesses to develop bankable projects to attract investment funding, as the EU recently secured over US$100 million in credit lines for Zimbabwean banks.

The announcement came during the inaugural three-day EU–Zimbabwe Business Forum held from Tuesday, aimed at strengthening bilateral trade, investment, and economic cooperation between the EU and Zimbabwe.

Over 60 companies from 12 EU member states, including France, Germany, Austria, Finland, Poland, the Netherlands, Italy, Sweden, Belgium, Spain, Portugal, and the Czech Republic, attended the forum to explore business opportunities and partnerships with local firms.

Despite these efforts, many Zimbabwean businesses continue to struggle to secure investments. Analysts suggest this is due to a lack of bankable or viable long-term projects.

"It's not only about getting the money, but how do you get it? Actually, you need a bankable project. You need to be able to present your project in a certain way. That's why we have also put in technical assistance," Von Kirchmann said during a panel discussion on Wednesday.

Through the EU's lending programmes, supported by the European Investment Bank (EIB), over US$100 million in loans have been made available to several local banks, including CABS, First Capital Bank Zimbabwe (FCB), Stanbic Bank Zimbabwe, and NMB Bank.

"So, we have signed over US$100 million with NMB (US$39 million), FCB (US$14 million), CABS (US$17 million), and Stanbic (US$28 million). The European Investment Bank gave a loan to these banks, which has a low interest rate and a tenure of up to seven years, and the banks can then use this tenure," he explained.

"Most of the banks have started using it, some even with a lower interest rate. As Gerald from NMB was saying, there is no long-term lending available locally. So even if you get three years, it's already great. The EIB's seven-year loans can be a game-changer."

Von Kirchmann also praised local firms, noting there had been no defaults on loans accessed so far.

"It's not entirely free loans, but it's linked to agriculture, the food industry, renewable energy, and other cross-cutting sectors," he added.

However, access to finance remains a major challenge for Zimbabwean businesses due to a restrictive economic and policy environment. The tight regulatory monetary framework has led to a liquidity crunch in the market.

Reserve Bank of Zimbabwe (RBZ) deputy governor Innocent Matshe disclosed that the central bank had injected ZiG16.5 billion into the market, but official documents indicate only a small portion is actively circulating.

"As economic agents, we need to understand that you cannot succeed in business if you are always expecting that you will fail. Let's build upon the success that we have been expecting to be positive," Matshe said.

He reassured stakeholders that the RBZ is committed to maintaining stability, which underpins exchange rate stability and broader economic confidence.

"The obtaining exchange rate stability will be sustained through the medium term, supported by strong liquidity and money supply management and increased inflow of foreign currency," Matshe said.

He further stressed the central bank's efforts to foster trust both locally and internationally to create a stable currency environment conducive to business growth.

"We are trying to foster confidence and trust locally and internationally to create an environment where currency is not an issue of interest, but in doing so, we would like to build a system that everyone can trust," Matshe added.

The EU–Zimbabwe Business Forum marks a significant step towards enhanced cooperation, with hopes that increased access to finance and technical support will stimulate Zimbabwe's private sector and economic growth.