Ecobank Zimbabwe Limited has undertaken to guarantee State-owned power utility ZESA Holdings on the importation of electricity from regional power utilities, Business Times has established.
A guarantee ties the guarantor, which is Ecobank in this case, to service a debt in the event that ZESA fails to pay the obligation to regional power suppliers. The guarantee binds Ecobank as surety.
Ecobank Zimbabwe chief executive officer, Moses Kurenjekwa, said the lender has been instrumental in organising trade finance and guarantees in the importation of power.
“We have facilitated trade finance in a big way, and we have also played a huge role on issues to do with power (importation). We have availed a guarantee to the suppliers of power to say please supply power to ZESA. And, we have been facilitating collections from ZESA,” Kurenjekwa told Business Times.
Zimbabwe currently battles power supply deficit which has been exacerbated by ZESA’s critically constrained electricity generation capacity. The power utility is generating about 1 200 megawatts (MW) daily from its five power stations at Kariba, Hwange, Bulawayo, Harare and Munyati, which is not adequate to a national demand of about 1 800MW.
To cover for the shortfall, ZESA imports electricity from Eskom of South Africa and Hydro Cahora Bassa of Mozambique.
Three years ago, ZESA signed a non-firm contract with Eskom for the Zimbabwe power utility to access up to 300MW of electricity. This doesn’t mean Zimbabwe is getting 300MW because the non-binding agreement stipulates that Eskom can only supply Zimbabwe when it has a surplus.
However, ZESA signed a firm-contract with Hydro Cahora Bassa to supply 50MW to Zimbabwe. A firm contract means the electricity supply to Zimbabwe is guaranteed.
ZESA accesses the balance from the Southern Africa Power Pool, a regional collaboration linking up national grids.
A unit of Lome-headquartered financial group Ecobank Transnational Incorporated, Ecobank Zimbabwe has managed to tap into the trade financing niche market leveraging on the group’s muscle.
Kurenjekwa said the lender was also providing lines of credit to local miners.
“We are also providing lines of credit for importation of critical consumables. Beyond that, we have a database of all accredited suppliers that we have worked with and have asked them to do a credit due diligence on us so that there is confidence in our capacity as a bank.
“So once any one of the mining firms contracts that company and tells them that they are getting funding from Ecobank they are then given extended terms of credit because of the confidence they have in the bank,” he said.
Ecobank Zimbabwe boasts of 12 branches.
It is still looking at opportunities to expand while following its value chain strategy on expansion.
The bank has also since advanced its digitisation strategy through an introduction of a mobile phone application called QR which is set to make transacting more convenient.
The QR code is a type of matrix first designed in 1994 for the automotive industry in Japan. A barcode is a machine-readable optical label that contains information about the item to which it is attached.
Ecobank segments its businesses in Africa into four geographical regions.
These reportable operating segments are Francophone West Africa, (UEMOA), Nigeria, Anglophone West Africa (AWA), Central, Eastern and Southern Africa (CESA).