Industry cheers British bailout

CZI president Sifelani Jabangwe

CONFEDERATION of Zimbabwe Industries (CZI) has said the $100 million British package will give fresh impetus to industry, which has been battling to access credit lines.

Yesterday, Standard Chartered Bank announced that it was partnering with CDC Group PLC to avail a $100 million investment facility for the local private sector, thereby providing the much-needed lines of credit for manufacturers.

BY TATIRA ZWINOIRA

CDC is a development finance institution owned by the United Kingdom government under the Department for International Development.

CZI president Sifelani Jabangwe said the financial package would go a long way in supporting its intended recipients in the manufacturing sector.

“It is a positive thing in that we have been trying to access lines of credit in the past and the area where it is targeted for is exactly what we are concerned about which is retooling and working capital. It is a positive step, particularly by the United Kingdom, and is actually going to augur significantly with our objectives of reintegration into the global economy,” he said.

“You will find that European Union states look at how we relate with our past colonisers, which know us best. So, if our relations like in this case have improved, it then makes it easier to engage with other parties. So in this case, it is an extension of a loan. Money has always been our problem and I think given the issue relating to the issue of our debt, it might be much easier.”

The $100 million investment facility is a five-year funding term that will see CDC and Standard Chartered share the default risk on the loan originated by Standard Chartered Bank Zimbabwe locally.

The investment will be used for capital expenditure and helping businesses meet their day-to-day financing needs with a target of firms in the food processing, manufacturing and agriculture sectors.

The risk-sharing agreement between CDC and Standard Chartered Bank comes at a time local banks are de-risking by distributing fewer loans, especially local banks.

CDC chief executive Nick O’Donohoe said Zimbabwe could be one of the great investment success stories of the next decade “if a new government in post-election Zimbabwe encourages investment and pro-business policies”.

“What the country needs is patient capital, and it needs it now,” he said.

The private sector faces a critical shortage of foreign currency for the importation of raw materials and other essentials after many years of economic decline.

Financial expert Persistence Gwanyaya said the positive about that facility is that it was a medium term facility.

“We have seen a number of banking institutions providing lines of credit, but they have been largely short-term lines of credit, which are not suitable for the industrialisation needed for the country. So that facility is being given to the private sector so that we improve production and productivity in Zimbabwe so that it becomes a competitive economy,” he said.

Standard Chartered Bank Zimbabwe chief executive officer, Ralph Watungwa said the bank was delighted to facilitate funding for the private sector businesses, which would help contribute to the much-needed economic growth and present new job opportunities as part of its long standing commitment to Zimbabwe.

“This transaction is an example of how local market knowledge, paired with global expertise, enables us as a bank to forge partnerships which promote long term, sustainable economic development. This deal really underscores our brand promise, Here for good,” he said. – NewsDay