·         The deal is to support SMEs in the private sector

·         This is the second credit line by EIB to Zimbabwe

·         Agriculture is likely to secure a big share

 

Harare- First Capital Bank (FCB) and the European Investment Bank (EIB) have sealed a EUR12.5 million credit facility deal to develop eligible projects undertaken by Small to Medium Enterprises (SMEs) and Midcap companies in Zimbabwe. 

 

Speaking at the launch ceremony in Harare, the EU ambassador to Zimbabwe, Timo Olkkonen said the facility is a major step by the EU member states to come and do business in Zimbabwe through promoting private sectors which are key to sustainable developments. 

 

This is the second line of credit facility by the EIB to Zimbabwe following the one availed to CABS in 2021 worth EUR15 million, which was also the first engagement of EIB with Zimbabwe. 

 

The facility also comes at a time when Zimbabwe’s businesses are hit by a US dollar starvation to import raw materials, forcing other players to go to the parallel market to secure the greenback at inflated prices. 

 

“The EIB private sector facility with FCB follows a similar package agreed earlier with CABS and it seeks to address one of the key bottlenecks to doing business in Zimbabwe which is access to finance.”

 

“As we continue to work towards a more resilient post-pandemic Zimbabwe, we look forward to seeing how this facility supports the private sector in the challenging economic environment,” Olkkonen said.

 

The economic environment in Zimbabwe is facing a busload of challenges, primarily scarcity of foreign currency, ragging inflation and exchange rate volatility. 

 

Players within the agricultural sector, particularly horticulture is likely to get the lion’s share as Zimbabwe is a key provider of horticulture products to the European market. 

 

Other beneficiaries mentioned include mining, health. The loan facility will give priority to agriculture as a whole and mining, which are the productive sectors in Zimbabwe.

 

However, with a lot of side-marketing in the mining sector and a lot of loopholes that ensure Zimbabwe lose billions of US dollars per annum, the large chunk is likely the horticulture.

 

Commenting on the credit facility ceremony, FCB chairperson Patrick Devenish said, “We are excited to be launching this credit line as it unlocks diverse opportunities for our clients who have steadily grown their businesses and positioned themselves for prospects such as this.”

 

“Sterling collaborative efforts have been apparent at every step of this journey echoing the value system that challenges us to create value within existing relationships.”

 

However, the EU ambassador to Zimbabwe said such loans will not be extended to the public sector unless the existing arrears are cleared by the government. 

 

Zimbabwe owes billions of dollars to the international lenders, which, are stumbling efforts for new credit lines. 

 

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