The African Export-Import Bank (Afreximbank) has pledged to provide advisory services when Zimbabwe privatises its loss-making parastatals and finance the country’s industrialisation thrust, new details have emerged.
BY NDAMU SANDU
The bank’s president and board chairman, Benedict Oramah and his team met President Emmerson Mnangagwa on Tuesday, where the Cairo-headquartered lender pledged to assist Zimbabwe in its efforts to re-engage the international community and the rebuilding of investor confidence.
“President Oramah said that Afreximbank would provide advisory services to the government in its privatisation of State-owned enterprises and would improve foreign currency liquidity in the country through a nostro guarantee programme,” the bank said.
Public enterprises have been underperforming and a drain on the fiscus through corporate governance deficits, with their contribution to the economy down to 2% from a peak of 60%.
Last year’s financial audits showed that 38 out of 93 public enterprises incurred a combined $270 million loss, as a result of weak corporate governance practices and ineffective control mechanisms, Finance minister Patrick Chinamasa said in his 2018 National Budget.
He said 70% of these entities were technically insolvent, representing an actual or potential drain on the fiscus.
Afreximbank plans to conduct a comprehensive needs assessment of the country and review its country programme in order to ensure that it addressed the critical needs of Zimbabwe.
The bank pledged to support the industrialisation thrust.
Oramah said the support would be done through financing of the construction, expansion or renovation of industrial parks/special economic zones, revival of some industries that were adversely affected by the international sanctions on the country and development of the natural resource sectors through local content programmes that would ensure that significant proportions of the value from natural resources were retained in Zimbabwe, Afreximbank said in a statement.
Oramah was accompanied by Afreximbank’s executive vice-president (Finance, Administration and Banking Services) Denys Denya, regional chief operating officer for Southern Africa Gift Simwaka and Richman Dzene, special assistant to the president for economic policy.
Mnangagwa expressed appreciation for all the financing support which the bank had been providing to Zimbabwe and endorsed all the interventions in the Zimbabwean economy proposed by Afreximbank, the bank said. He said government was committed to ensuring a mutually beneficial relationship with the bank and to the speedy execution of novel initiatives outlined by Oramah.
Oramah said that the bank’s support programmes to Zimbabwe included the finalisation of a $600 million line of credit facility to enable the government finance trade and trade-related projects. He said Afreximbank was currently processing funded and unfunded facilities for Zimbabwe amounting to between $1 million and $1,5 billion.
The facilities included a country risk and investment guarantee programme, which would help the new government to attract foreign direct investment into critical sectors of the economy and a $150 million line of credit confirmation facility to enable commercial banks process the imports of some essential goods, the bank said.