via Afreximbank to avail US$100m bridge finance | The Herald 28 November 2014
AFREXIMBANK will avail a six months bridge finance gap of $100 million towards the CBZ Bank $200 million Diaspora bond to provide funds for companies requiring urgent injection.
The bond will be issued during the first quarter of 2015, Finance and Economic Development Minister Patrick Chinamasa said when he presented the 2015 National Budget yesterday.
CBZ issued its maiden $68 million Diaspora bond in 2012 which expired in April this year.
“Following the successful issuance of the Zimbabwe Economic Recovery Bond by CBZ Bank in collaboration with Afreximbank in 2012, the two banks will be launching another bond worth US$200 million in the first quarter of 2015,” said the minister.
“Meanwhile Afreximbank will avail six months bridge finance of US$100 million towards the bond. This is meant to immediately avail funds to companies that need urgent injection of funds.”
On lending rate margin will be around plus or minus 10 percent, former CBZ chief executive, now Reserve bank of Zimbabwe governor Dr John Mangudya said in February.
He said then: “The renewal of the bond is an important step in Zimbabwe’s recovery from the hyperinflation period to the current environment characterised by liquidity crisis.
“This is a positive step towards opening new platform for investment either locally or internationally.”
Minister Chinamasa said the beneficiaries of the bridge finance have already been identified and are mostly from the manufacturing, ICT and tourism sectors, among others.
The Minister said the Government welcomed the timely support which is expected to facilitate re-tooling and equipping of industry and consequently improve on capacity utilisation.
The latest development comes at a time when many continue to dragged down by liquidity shortages which have prevented firms to re-tool. This situation has led to company closures.
Statistics from the National Authority Social Security shows that between 2011 and 2014, slightly over 4 600 companies closed down, leaving about 55 000 workers jobless.
Minister Chinamasa said there was need to for fresh capital injection into the economy.
“Significant investment into the economy is needed for re-tooling, re-capitalisation and overhaul of the antiquated machinery, and for value addition,” said Minister Chinamasa.
Economists said this was a welcome development as this facility would avail immediate funds which are critical for funding industrial requirements against the backdrop of serious liquidity constraints.
The most exciting feature of the facility, economist noted was targeted at manufacturing sector and information communication technologies which falls under value addition and beneficiation and infrastructure and utilities clusters under Zimbabwe Agenda for Sustainable Socio Economic Transformation.
“If well administered and targeted to productive and export oriented sectors, this funding can actually be a catalyst of generation of liquidity with sustained multiple effect on the rest of the economy,” economist Dr Gift Mugano said in an interview yesterday.
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