EIB AVAILS $80M TO ZIM
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