ECOBANK Zimbabwe, a unit of Togo-based Ecobank Transnational Inc, is arranging a $45 million line of credit to fund importation of critical raw materials, an official has said.
Zimbabwe is grappling with serious shortage of foreign currency partly due to subdued exports resulting from low production and depressed foreign direct investment.
The country adopted the multi-currency system in 2009 after the value of the Zimbabwean dollar was eroded by hyperinflation, which reached 231 million percent in June 2008.
Since January 2018, Ecobank has been funding nearly 100 percent of the crude (edible) oil imports for production of cooking oil and about 80 percent of fuel imports, the bank’s chairman Mr Fortunate Chisango said yesterday.
The bank also financed importation of the bulk of fertiliser used for Government imports substitution programme, Command Agriculture.
“. . . we are concluding structures to roll out an additional $45 million into the Zimbabwean market, to fund the import of critical implements for our businesses,” said Mr Chisango at the official launch of the bank’s Emerald Club, an initiative to support emerging businesses. “It is not only a testament of our capacity, but our commitment to our country and the business which ply their trade in it.”
Since October 2017, Ecobank has facilitated over $150 million worth of lines of credit into the economy, assisted by its shareholder and foreign partners, said Mr Chisango.
The Reserve Bank has been struggling to ensure adequate foreign currency allocations to various deserving areas of the economy, including those sectors on top of its priority list, as the country continues to face challenges of a huge foreign payment backlog.
Speaking at the same event, RBZ deputy governor Dr Jesimen Chipika said the central bank would continue putting in place measures to support the growth of SMEs.
She said the central bank was finalising the establishment of the collateral registry to allow businesses to use movable assets to obtain credit finance.
The Credit Guarantee Scheme, which will facilitate partial transfer of credit risk stemming from SME loans without inadequate collateral was being re-introduced through recapitalising the Export Credit Guarantee Company, the RBZ deputy governor said.
Zimbabwe experienced a structural shift in the economy from predominantly large corporates to SMEs, which are playing a critical role in economic development through job creation and poverty alleviation, contributing more than 60 percent of the country’s gross domestic product, according to the central bank.
Ecobank’s Emerald Club seeks to promote financial emancipation for small to medium businesses through availing financing for their activities.
“The initiative by the Reserve Bank to create an asset management company, which is commonly known as ZAMCO, to resolve the non-performing loans in the banking sector has improved the capacity of banks to create credit,” said Dr Chipika.
“The bank’s balance sheet must be healthy for us to be entrusted with resources from other countries.”