ZSE-Listed bank, NMB has received a EUR 12.5 million credit facility from the European Investment Bank (EIB) that is earmarked for private sector lending with exclusive bias towards exporters over a period of seven years.
The facility by the EIB, which is the lending arm of the 27-member European Union, is the second of its kind in the last twenty four hours after it extended a similar amount to another banking institution, First Capital Bank yesterday.
Speaking at the signing ceremony this morning, NMB chief executive officer, Gerald Gore said the facility adds to the bank’s existing lines of credit to reach a tally of US$ 50 million.
“We will dedicate this facility to companies that consistently generate foreign currency. We want this to capacitate exporting companies so that they compete effectively on the global arena,” said Gore.
One of the major bottlenecks in doing business in Zimbabwe is the lack of financing which has been subdued owing to little inward foreign investment and the volatility of the macro-economic environment which makes it high-risk for long-term lending.
Often, banks prefer lending in local currency which is fast deteriorating at very high interest rates.
Gore said the bank will use the facility to offer short-term working capital and long-term capital investments at varying interest rates.
Last year NMB issued an Agro-bond and managed to raise ZWL$ 2 billion that it used to finance the 2021-22 farming season.
“The EIB facility will take it up from there and complement efforts that we were already doing in financing exporters in agriculture,” said Gore.
The Head of EIB representation Southern Africa and Indian Ocean, Jim Hodges said the facility is meant to accelerate private sector growth given lack of adequate financing on the local market adding that last year the bank lent a record EUR 4.5 billion across Africa as part of the bloc’s engagement with the region.
“We want to see Zimbabwean private sector take advantage of tax-free exporting agreements the country has signed together with other African countries to export to Europe. Negotiations are on-going to deepen this agreement,” said Hodges.
Zimbabwe has a trade surplus with EU bloc having exported US$ 433 million worth of merchandise in 2021 against US$ 363 million worth of imports reflecting a US$ 70 million trade surplus.
Reserve Bank of Zimbabwe Governor, Dr John Mangudya said the facility is a timely intervention to the economy which is battling foreign currency shortages and low productivity.
“It provides necessary patient capital that is required in Zimbabwe and has been lacking. It will also reduce pressure on the foreign currency auction system.”
