AfDB injects US$6 million into private sector
June 16, 2013 in Business
THE African Development Bank (AfDB) has disbursed about US$6 million
directly to Zimbabwe’s private sector this year, in a vote of confidence for
the country’s revival programme.
BY OUR STAFF
Ebrima Faal, AfDB’s regional director said the lines of credit were in
addition to those disbursed by institutions such as the African
Export-Import Bank (Afreximbank) and PTA Bank, where AfDB has shareholding.
In 2011, AfDB’s board of directors approved a US$8 million loan to finance
Lake Harvest Aquaculture project on Lake Kariba, the bank’s first private
sector investment in Zimbabwe after many years.
The money was disbursed in tranches with a balance of US$2 million still to
be disbursed.
Faal said the bank “envisages disbursing the balance of the Lake Harvest
loan of US$2 million by the end of 2013”.
“Beyond its direct investment in Lake Harvest, the bank has remained engaged
in supporting Zimbabwe’s private sector organisations through its
partnership with regional financial institutions that operate and invest in
Zimbabwe.
“This indirect exposure is significant and covers all sectors of the
economy, including the social, agribusiness, manufacturing and financial
sectors,” Faal said.
“The Bank is a shareholder of Afreximbank and PTA Bank, for which Zimbabwe’s
country operations amounted to 11% and 26% of investment operations
respectively in 2012.”
Afreximbank recently said it would increase its country support for Zimbabwe
by US$200 million this year.
Faal said AfDB was currently processing lending facilities with both
institutions, which would contribute in helping both regional banks continue
to support Zimbabwe’s private sector and private investment.
“The bank has also provided a LOC [letter of credit] to Industrial
Development Corporation of South Africa which has on-lend about US$30
million to Agribank Zimbabwe. The bank is also a limited partner in private
equity funds that have already or are currently considering investments in
the country,” he said.
Local banks constrained
Zimbabwe’s companies are in need of lines of credit to replace ageing
equipment that are obsolete and inefficient, thereby increasing the cost of
production. Local banks are however constrained to offer long-term financing
due to the short tenure of deposits.