Afreximbank to bailout Zim

Minister Chinamasa

Minister Chinamasa

Taurai Mangudhla and Livingstone Marufu
AFRICA’S trade finance bank, the African Export and Import Bank (Afreximbank), has made commitment to bailout Zimbabwe with about $1 billion to stabilise the economy.

The Afreximbank on Saturday evening signed a memorandum of understanding with the Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya, for a $600 million nostro stabilisation facility that constitutes the bulk of the global figure to be extended to Zimbabwe.

Finance and Economic Development Minister Patrick Chinamasa, said the RBZ is working on a number of new facilities with the Afreximbank including the nostro stabilisation facility.

“As you are aware the Reserve Bank is working on a number of new initiatives, the $600 million nostro stabilisation facility to meet the forex requirement for productive foreign payments, the $150 million letters of credit facility to support the importation of fuel as well as fertilisers and feedstock for the manufacturing of cooking oil,” Minister Chinamasa said at a dinner held to officially hand over titled deeds to the Afreximbank for 1,2 hectares prime land for the construction of its Southern African office at Harare’s Newlands.

The fully subscribed dinner was attended by Government officials, former Reserve Bank Governor Gideon Gono and his predecessor Leonard Tsumba as well as bank executives. Minister Chinamasa said the Afreximbank was playing a critical role in Zimbabwe’s arrears clearance strategy.

“As you may be aware, the Afreximbank is the lead arranger to secure funding for the repayment of our arrears of $1,8 billion to the World Bank and the (African Development Bank) AfDB that is essential to our net foreign finance for the country and reduce the country risk,” said Minister Chinamasa, adding the country had chosen to prioritise productivity and economic growth initiatives ahead of the arrears clearance strategy.

“In fact they (Afreximbank) have put this facility already and at the moment the ball is in our court, we decided we must first address fundamental factors such as addressing the issues of budget deficit, addressing the issues of import cover reserves, addressing the issues of reducing the trade and current obligations sustainable into the future, we cannot afford to clear today and tomorrow we are in arrears.

“It’s a long road and I am glad we are equal to the task of travelling that difficult road,” Minister Chinamasa added.Minister Chinamasa said Zimbabwe recognises the indispensable wealth provided by the Afreximbank and numerous credit facilities to this economy over the past two decades. He said the Afreximbank has a number of facilities in an amount of around just under $1 billion to support economic activities in Zimbabwe.

Some of the facilities include the running facilities including the $200 million Afritrades facility to support banking sector stability which basically makes it possible for interbank lending and occupies the position of defacto lender of last resort, the $200 million future flows export facility which gave birth to bond notes as an export incentive to exporters.

“We also have $150 million gold backed facility and another $150 million Zesa facility, a $70 million grain import facility, this is the facility we drew down to import our maize over the past drought and over $150 million worth of facilities having been extended to various sectors of the economy chief among them being the tobacco and tourism facility,” Minister Chinamasa said.

“We are grateful Afreximbank has once again demonstrated its commitment as a permanent development partner for the people of Zimbabwe and Southern Africa and pan Africa.

The withdrawal of international support by multilateral and bilateral institutions and imposed sanctions was indeed difficult but with the help of the Afreximbank and other institutions the journey has been made bearable,” the Minister added.

Zimbabwe is a founding shareholder and the third largest shareholder in Afreximbank after Nigeria and Egypt. The bank’s president Dr Benedict Oramah said the pan African bank is currently processing deals worth about $1 billion for both private and public sector entities in Zimbabwe. And chief among them is the $600 million facility which will support the importation of critical imports until the next tobacco selling season.

“This evening we will be signing a Memorandum of Understanding with the Reserve Bank of Zimbabwe in relation to a $600 million facility which we hope will support critical imports until the tobacco season sets in early next year.

We believe that the facility will help stabilise imports, sustain the recovery Zimbabwe is beginning to witness and stabilise foreign exchange markets and we thank Governor Dr Mangudya for the opportunity.

“The other facilities we are considering to arrange, which are also aligned with national development priorities, will help accelerate the transformation of the Zimbabwean economy, facilitate imports of essential and capital goods, improve national reserve position and enhance foreign currency liquidity in the banking system.”

Afreximbank recognises that long term sustainable growth and development of Africa requires two important strategies, first, a deliberate and concerted effort to decommoditise continental exports through value addition. Secondly, diversification of export markets, promotion of regional integration and intra-African investments.

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  • yowe

    MOUs nekuzvikwereti here?? Hahahahaha

  • Musorowegomo

    I think the Herald’s misleading statistics of Zimbabwe as the 3rd largest Afreximbank shareholder was talking about “voting” shareholders restricted to African nations, which is very different from their capital investments in the bank which are far from being proportional to voting shares. The 40% held by non-Africans who provide the largest chunk of Afreximbank’s real money asset base together with Egypt and Nigeria holding much of the remaining 60%, doesn’t really include other voting shareholders like Zimbabwe or other African nations with far less than 1% of voting shares each.
    Just had a quick look at Afreximbank’s financial report ending 2016, didn’t see any asset base of $12 billion worth speaking of? However I did notice figures for the Bank’s Net worth (Shareholders’ Funds) had risen to US$1.63 billion, with Afreximbank’s callable capital as at 31 December 2016 amounting to US$ 567.7 million. The Bank maintains the callable capital as an additional buffer in case of need. I’m not a high flying financial expert, so perhaps someone can explain how Afreximbank with such limited assets can afford to extend billions on loans and facilities towards Zimbabwe? Must be Rocket Science??

  • Idiot

    He he, we fought for the land. Now busy handing out title deeds to lenders. Land us finite, and you’ve already mortgagedone the minerals under it, what next? Sell the children into slavery? To fly a 94 year old brat around the globe

  • Just Sayin’

    Herald, why didn’t you pick on this blatant lie:

    “The withdrawal of international support by multilateral and bilateral
    institutions and imposed sanctions was indeed difficult ..” the Minister added.

    Utter rubbish… Chinamasa knows full well, and has stated as much in this newspaper, that these institutions will not and cannot loan MORE money to Zimbabwe until we start and finish paying our old debt of US$12b + back… which incidentally we started defaulting on BEFORE 2000 and any ZIDERA kicked in…

    No financial sanctions on general credit have been put into practice yet. (Only sanctions on individuals and their assets, nothing to do with the greater economy).

    Here is the real problem. ZANU-PF has a culture of living on credit and reneging on repayments, and looked great when the economy was booming. Turn the credit off and they are exposed for what they are… useless… they simply cannot manage macro finances

    And look what happened when we ran out of credit, they steal the diamonds, steal companies (Indigenisation), and steal everything they can get their hands on… but it’s all running out and the pigs can’t handle it

  • LeyJ

    No prizes for guessing who will get $999 million of that alleged $1 billion. More Rolls Royces and Ford Rangers to be driven on pothole-riddled roads

  • Madara

    yeah he should use some of that money he has stolen to get some dental work.

  • Mhofu Chaiyo

    What is a “nostro stabilisation facility?” Can someone give a simple answer?