Zimbabwe gets $100m Afrexim Bank loan

via Zim gets $100m Afrexim Bank loan | News24 2014-03-22

The African Export-Import Bank (Afrexim) on Saturday gave Zimbabwe a $100m loan to allow its central bank to set up an inter-bank market for the first time in five years, which would allow the apex bank to influence interest rates.

The southern African state abandoned its own money in 2009 after hyperinflation rendered it worthless, and adopted foreign currencies such as the US dollar and South Africa’s rand which left the central bank unable to influence rates.

Money market rates have spiralled out of control as a result, with bank deposits attracting returns as low as 0.15% while borrowing costs are quoted as high as 35%- a prohibitive rate for farmers and manufacturers.

The central bank will use the $100m to re-introduce an inter-bank market – where local banks can borrow from others with surpluses – and set an overnight accommodation interest rate, which would act as the benchmark for market rates.

Finance Minister Patrick Chinamasa said the fund was part of measures to improve liquidity in an economy facing declining export earnings and companies that are struggling to survive.

“This will at the very least unlock surplus funds from surplus banks for those in deficit,” Chinamasa told a press conference.

Local banks would use Afrexim Bank-backed securities and government treasury bills as collateral when borrowing from each other. Treasury Bills will be issued from Monday, Chinamasa said.

The central bank published an interest rate range guide for the money market in January and proposed indicative yields of between 6.6%and 8% for short term debt.

The government has taken over the central bank’s $1.35bn debt and is seeking up to $200m to capitalise the bank.

Britain’s Standard Chartered and Barclays Plc and South Africa’s Standard Bank and Nedbank are the major foreign banks with operations in Zimbabwe.


  • comment-avatar
    roving ambassador. 9 years ago

    2007-8 ,when the banks were struggling to get cash, the reserve bank released some money for the banks. There was a frenzy with the ministers grabbing what ever was available before it reached the banks. the people got the little that was left.
    I am just wondering whats going to happen to this $100 million. Its such a small amount Obert cow use the whole lot.


  • comment-avatar
    Chaka 9 years ago

    Another loan.

  • comment-avatar
    easily fooled 9 years ago

    The reserve bank cannot andnwill never influence the interest rates for as long as they use other countries’s curriencies. Instead, Ban Bananke and Tito mboweni and ordinary traders at fouth street in Harare can do that. 100 million is such a small amount for any liquidity support, if anything, it will be spend on administrative issues. As we all know salaries in Zimbabwe are just too high….the money market director at rbz will be paid 12million per year

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    gizara 9 years ago

    lol, interbank market. should we rather say another way of financing gvt’s deficit in disguise. surely afrexim would not have given the loan if they knew the real purpose.

  • comment-avatar

    This whole scheme depends on some banks having a surplus of funds. Right now, none seem to be in that situation. It also supposes that the banks will purchase Zimbabwe treasury bills. If I was running a bank, I would never buy those because my customers and shareholders would never get their money back. Chinamasa is destined to fail.

  • comment-avatar
    Mike Nyathi 9 years ago

    Amazing how people continue pouring money into the zanu black hole. When will they learn.