EIB runs out of $48m on-lending facility
MELODY CHIKONO / TANYARADZWA NHARI
THE European Investment Bank (EIB) has exhausted its 40 million euro ($48 million) facility for Zimbabwean banks for on-lending to the private sector.
It comes as the adoption of the facility had many takers after the European Union (EU) allowed its bank to roll out the credit lines despite the country’s external debt.
The EU’s surprise decision for the EIB to lend to Zimbabwe was the culmination of six years of protracted deliberations as it was skeptical of providing loans to Harare.
This week, the EIB deployed a €25 million (US$26,691,677.95) facility to FCB Bank and NMBZ.
In previous years, the EIB had no financial relationship with Zimbabwe as it owed $361 million, according to Zimbabwe’s Public Debt Management Office, as of September 2021.
The EIB only supports the private sector.
“We are delighted to have been able to use the installation so quickly. We are demand-driven and we look at what the market demands, so we keep talking to banks and the market to see what their demands and needs are,” said Jim Hodges, EIB Regional Representation Manager for Southern Africa, at businessdigest. lines of the unveiling of its two lines of credit to FCB Bank and NMB Bank.
“We try to position ourselves to help them. We have just completed these two transactions, so it is too early to talk about the size of the installation, but much will depend on market requirements.
Hodges said the bank was demand-driven.
The facilities come at a time when companies are struggling with foreign exchange to boost their working capital needs as the Reserve Bank of Zimbabwe (RBZ) currency auction fails to meet demand. Requirement.
“We don’t impose any lending to the country, so it’s really the appetite of the banks that say they want to partner with us. They have a pipeline, so it’s a two-way dialogue,” Hodges said.
“For the moment, we limit ourselves to working with the private sector and our intervention is limited to the banking sector and large companies.
“We are in discussions with almost all the major banks in the country. We keep the dialogue open. It’s demand-driven and we’re not there to impose our facilities or our products on the market. We have to wait for the market to tell us what it wants,” Hodges said.
Last year, Hodges said the EU had taken the decision to support Zimbabwe despite its indebtedness.
The EIB is directly owned by the EU.
Zimbabwe’s external debt was US$13.17 billion as of September 2021, with arrears and interest on debt accounting for 77%. However, if undisclosed debt owed to the African Export-Import Bank and China Exim Bank is included, the government’s external debt is estimated at around $20 billion.
As of September 2021, in addition to the government owing $361 million to the EIB, it also has outstanding obligations to the World Bank ($1.52 billion), African Development Bank (AfDB) ($716 million ) and other multilateral creditors (US$64 million).