Source: Exporters remain top priority for the country – The Zimbabwe Independent November 9, 2018
THE Reserve Bank of Zimbabwe (RBZ) has since last year availed US$50 million to trade financing as the country moves to redress the widening current account deficit, a ZimTrade official has said.
Chief executive Lance Jena told businessdigest this week that the RBZ had, despite forex shortages, continued to support the trade promotion body in its bid to grow exports.
“In the space of 2018, the access to finance within Zimbabwe as ZimTrade, we have engaged the central bank and I think in 2017, the central bank availed in excess of US$20 to US$30 million, for various sectors,” Jena said.
“If I aggregate, it is something in the region of US$50 million and we are in negotiations with the central bank to increase that figure.”
The export sector has been hampered by lack of trade financing while local banks have failed to support industry.
He said exporters remained a top priority for the country.
“RBZ has guaranteed that anything that is going to support the export sector, there are no questions to be asked, they will make every effort that we access those funds because exports guarantee a payback structure that pays for those borrowings,” Jena said.
He said the export sector had not been spared the prevailing liquidity crunch, worsened by rising parallel market exchange rates.
“It has not been easy. So what we did was that we agreed on special vehicles we created to access that funding.
The vehicles we created were with Agribank, Homelink and we said that the Export Credit Guarantee Company of Zimbabwe can insure and guarantee those borrowings so an SME will go to Agribank for support,” Jena said.
Afreximbank has also supported the country’s export sector to the tune of US$1 billion within the past year.
“We don’t have a specific amount that we have given Zimbabwe for trade finance but we give Zimbabwean companies and entities, that qualify to access our facility, different amounts. We have a country limit which we are managing through various means. The country limit for Zimbabwe is in excess of a billion dollars. But we have a way of mitigating the limits to enable the entities to be able to access the facility,” Humphrey Nwugo, Afreximbank regional chief operating officer for Southern Africa said.
The bank is also planning to release another grant to boost exports for the private sector in a bid to redress the current account deficit.
“We are a trade finance bank and structured trade finance is easy to manage. So we just find a way of externalising your repayments, that’s what we have been doing. Like I said, with over US$7 billion of lending, cumulative lending, you will be surprised that the non-performing ratio is zero to Zimbabwe, because of the way we structure our facilities. So the country-risk issues, we mitigate,” Nwugo added.
In 2017, 93% of Zimbabwe’s total exports were into Africa, with 63% of that destined for the South African market. In the same year, 53% of the country’s imports came from the African continent, with 40% being sourced from South Africa.
Last year, the country’s trade deficit stood at US$1,8 billion after imports shot up to US$5,5 billion against exports of US$3,7 billion.
The bulk of the country’s exports comprise of platinum group of metals (PGMs), gold, flue-cured tobacco, ferrochrome, nickel, chrome, and diamonds. The country’s major exports to South Africa include PGMs, gold and nickel.