A bank listed on the ZSE, the NMB received a credit facility of 12.5 million euros from the European Investment Bank (EIB) intended for loans to the private sector with an exclusive orientation towards exporters over a period of seven years.
The EIB facility, which is the lending arm of the 27-member European Union, is the second of its kind in the past 24 hours after granting a similar amount to another banking institution, First Capital Bank yesterday.
Speaking at the signing ceremony this morning, NMB chief executive Gerald Gore said the facility adds to the bank’s existing credit lines to total $50 million.
“We will dedicate this facility to companies that consistently generate foreign currency. We want this to empower exporting companies to compete effectively on the global stage,” Gore said.
One of the major bottlenecks to doing business in Zimbabwe is the lack of finance which has been moderated due to little inward foreign investment and volatile macro-economic environment which makes it high risk for long-term loans.
Often, banks prefer loans in local currency which deteriorates quickly at very high interest rates.
Gore said the bank will use the facility to provide short-term working capital and long-term capital investments at variable interest rates.
Last year, NMB issued an Agrobond and successfully raised ZWL$2 billion which it used to fund the 2021-22 agricultural season.
“The EIB facility will take over from there and complement the efforts we were already making to finance exporters in the agriculture sector,” Gore said.
EIB Head of Representation for Southern Africa and the Indian Ocean, Jim Hodges, said the facility is meant to accelerate private sector growth given the lack of adequate financing in 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 the private sector in Zimbabwe take advantage of the tax-free export agreements the country has signed with other African countries to export to Europe. Negotiations are ongoing to further this agreement,” Hodges said.
Zimbabwe has a trade surplus with the EU bloc having exported $433 million in goods in 2021 against $363 million in imports, reflecting a trade surplus of $70 million.
The Governor of the Reserve Bank of Zimbabwe, Dr John Mangudya, said the facility is a timely intervention for the economy struggling with foreign exchange shortages and low productivity.
“It provides the necessary patient capital that is required in Zimbabwe and is lacking. It will also reduce pressure on the currency auction system.