EIB AVAILS $80M TO ZIM

Chronicle (Zimbabwe) - - Business Chronicle - Bianca Mlilo

THE Europe In­vest­ment Bank (EIB) has availed an $80 mil­lion fa­cil­ity for the pri­vate sec­tor in Zim­babwe, a Cab­i­net min­is­ter has said.

EIB is the Euro­pean Union’s (EU) non-profit long-term lend­ing in­sti­tu­tion estab­lished in 1958 un­der the Treaty of Rome. It pro­vides fi­nance and ex­per­tise for sound and sus­tain­able in­vest­ment pro­jects to Europe but also sup­ports the EU’s ex­ter­nal and devel­op­ment poli­cies.

Fi­nance and Eco­nomic Devel­op­ment Min­is­ter Patrick Chi­na­masa said last week that the pack­age was a re­sult of en­gage­ments the coun­try had made with mul­ti­lat­eral fi­nance in­sti­tu­tions.

“More re­cently, we have been en­gag­ing the Euro­pean In­vest­ment Bank and we re­ceived a let­ter last week (first week of Novem­ber) that they are willing to sup­port our pri­vate sec­tor with a fa­cil­ity of $80 mil­lion for it to ex­pand its op­er­a­tions,” he said.

The min­is­ter said this was a pos­i­tive sign that the coun­try’s debt re­pay­ment strat­egy was work­ing well.

He, how­ever, be­moaned the high in­ter­est rates charged by multi-lat­eral fi­nance in­sti­tu­tions, which are in­creas­ingly viewed as bi­ased against Zim­babwe with dis­par­i­ties of up to 10 per­cent when com­pared to other coun­tries.

“Zim­babwe’s prob­lem is risk, if they are lend­ing to Zam­bia, the in­ter­est rate will be two to three per­cent. But if they are lend­ing to us the rates will be 10-12 per­cent, and that is a huge dif­fer­ence,” Chi­na­masa said.

“This is not only with re­spect to cap­i­tal loans but even for work­ing cap­i­tal for our pri­vate sec­tor.”

Many fi­nanciers and len­ders are shun­ning Zim­babwe be­cause of its high risk per­cep­tion and in­hibit­ing reg­u­la­tory and op­er­at­ing frame­work.

Fund man­agers, econ­o­mists and other ex­perts have blamed fac­tors such as in­di­geni­sa­tion laws and sud­den pol­icy shifts and an­nounce­ments for the sub­dued in­vest­ment in­flows into Zim­babwe.

Un­der the coun­try’s eco­nomic blue­print, the Zim­babwe Agenda for Sus­tain­able So­cioE­co­nomic Trans­for­ma­tion (Zim-As­set), an es­ti­mated $27 bil­lion is re­quired to re­tool in­dus­tries, in­fra­struc­ture and some such pro­jects.

Use of ob­so­lete equip­ment, some dat­ing back to the 1960s, has ham­pered pro­duc­tion in the coun­try. In­dus­try’s ca­pac­ity util­i­sa­tion presently stands at be­low 40 per­cent. How­ever, for­eign del­e­ga­tions have shown in­ter­est in help­ing Zim­bab­wean com­pa­nies re­tool.

A Turk­ish firm, Cukurova Group, last month pledged to sup­port Zim­bab­wean com­pa­nies with ma­chin­ery as part of in­dus­try’s ef­forts to re­tool.

The coun­try’s ex­ter­nal debt cur­rently stands at about $8 bil­lion af­ter pay­ing off in full the $108 mil­lion it owed to the In­ter­na­tional Mone­tary Fund. — @Bian­caMlilo

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