THE African Development Bank (AfDB) has disbursed about US$6 million directly to Zimbabwe’s private sector this year, in a vote of confidence for the country’s revival programme.
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Ebrima Faal, AfDB’s regional director said the lines of credit were in addition to those disbursed by institutions such as the African Export-Import Bank (Afreximbank) and PTA Bank, where AfDB has shareholding.
In 2011, AfDB’s board of directors approved a US$8 million loan to finance Lake Harvest Aquaculture project on Lake Kariba, the bank’s first private sector investment in Zimbabwe after many years.
The money was disbursed in tranches with a balance of US$2 million still to be disbursed.
Faal said the bank “envisages disbursing the balance of the Lake Harvest loan of US$2 million by the end of 2013”.
“Beyond its direct investment in Lake Harvest, the bank has remained engaged in supporting Zimbabwe’s private sector organisations through its partnership with regional financial institutions that operate and invest in Zimbabwe.
“This indirect exposure is significant and covers all sectors of the economy, including the social, agribusiness, manufacturing and financial sectors,” Faal said.
“The Bank is a shareholder of Afreximbank and PTA Bank, for which Zimbabwe’s country operations amounted to 11% and 26% of investment operations respectively in 2012.”
Afreximbank recently said it would increase its country support for Zimbabwe by US$200 million this year.
Faal said AfDB was currently processing lending facilities with both institutions, which would contribute in helping both regional banks continue to support Zimbabwe’s private sector and private investment.
“The bank has also provided a LOC [letter of credit] to Industrial Development Corporation of South Africa which has on-lend about US$30 million to Agribank Zimbabwe. The bank is also a limited partner in private equity funds that have already or are currently considering investments in the country,” he said.
Local banks constrained
Zimbabwe’s companies are in need of lines of credit to replace ageing equipment that are obsolete and inefficient, thereby increasing the cost of production. Local banks are however constrained to offer long-term financing due to the short tenure of deposits.