EIB to visit Zim before year end

via EIB to visit Zim before year end – NewsDay Zimbabwe September 15, 2015 by Victoria Mtomba

THE European Investment Bank (EIB) is set to visit Zimbabwe before the end of the year to meet some local financial institutions and strike partnership deals, an official said.

The visit by EIB comes after the bank had said it will give lines of credit to the financial sector early next year.

EU head of delegation to Zimbabwe, Phillippe Van Damme said EIB held discussions with the Reserve Bank of Zimbabwe to offer long-term credit lines to performing local banks for on lending to various sectors of the economy.

“EIB is planning to visit Zimbabwe before the end of the year to continue working on the formulation of a possible programme and among other things to get an update on the financial sector assessment and the identification of possible partnering banks,” he said.

Van Damme said EIB will make credit agreements with local banks on a business to business basis.

This will be the first time the EIB would be engaging with the private sector after the removal of the Article 96 on restrictive measures.

Article 96 of the ACP-EC Partnership Agreement and the restrictive measures included the suspension of financing of budgetary support and support for projects, as well as the suspension of the signature of the ninth European Development Fund National Indicative Programme, but did not affect the contributions to operations of a humanitarian nature and projects in direct support to the population, in particular those in social sectors, democratisation, respect for human rights and the rule of law.

The move will help the financial services sector and the economy at large as government is not accessing credit lines due to arrears. The extension of long-term lines of credit will increase liquidity constraints and increase long term funding, which is scarce in this economy.

Currently, the financial services sector is providing loans on short term basis.

As at June 30, 2015 total banking deposits increased by 14,2% to $5,6 billion from $4,9 billion for the same period last year while loans and advances were $4 billion. Bank deposits were demand deposits and constituted 55,49% of total deposits.

EIB has in the past worked with Zimbabwe in 30 different operations that included power and water. Zimbabwe owes EIB $300 million.

It also owes other multilateral financial institutions such as the International Monetary Fund, World Bank and the African Development Bank.

An EIB delegation came to Zimbabwe last year, where it discussed the arrears with the government.

EIB is headquartered in Luxembourg and funds its operations by borrowing on the capital markets rather than drawing on the EU budget. It is owned by the 28 member states of the EU.