European Investment Bank makes €15m move

April 29, 2021

…Inks deal with CABS

PHILLIMON MHLANGA

The European Investment Bank (EIB) yesterday unveiled a €15m business support facility aimed at boosting private businesses, including the SMEs across Zimbabwe, its first engagement with local lenders in 22 years.

The facility has a tenure of seven years and would be administered by CABS, a banking unit of Old Mutual Zimbabwe.

The investment by EIB in Zimbabwe comes at a time when local companies are battling the devastating effects of Covid-19, which ravaged the economy since last year in March.

The EIB loan facility comes at a time when many international financiers are shunning Zimbabwe due to its high risk perception and inhibiting regulatory and operating framework.

Zimbabwe’s industries have been particularly vulnerable to the Covid-19 induced lockdowns imposed by the government to curtail the spread of the deadly virus.

 CABS will extend the loans to local businesses, which have been ravaged by the Covid-19 pandemic. Some companies have closed shop while others streamlining operations, throwing hundreds of workers onto the streets.

With the financial support, it is expected that the new business financing will help local companies to strengthen competitiveness.

The new private sector financing will help companies most impacted by Covid-19 and is part of the EIB’s rapid response across Africa to strengthen economic resilience to the pandemic.

“Companies and communities across Zimbabwe have been impacted by the Covid-19 pandemic. CABS is committed to supporting private sector investments in  Zimbabwe and enabling our corporate, business and agricultural clients to invest  for the future and create economic opportunities,” CABS managing director, Mehluli Mpofu said.

“The new €15m European Investment Bank backing for CABS will unlock new private sector financing to be provided by our branches across the country to private businesses.”

Mpofu added: “The close cooperation between CABS and EIB financial experts over recent months will transform access to longer term loans in foreign currency essential for Zimbabwean businesses to grow during challenging  times and ensure that Zimbabwe benefits from the EIB’s rapid response to strengthen economic resilience to Covid-19 across Africa.”

EIB vice president, Thomas Ostros, said the credit line was critical for Zimbabwe companies as they grappled with the devastating effects of the Covid-19 pandemic.

“As part of Team Europe, the EIB is pleased to announce €15m of new targeted financing to CABS with the aim to provide liquidity and sustain jobs amid the pandemic and to strengthen private sector investment and create jobs in the post-pandemic recovery of Zimbabwe.

Today’s agreements demonstrate how Team Europe and African partners are joining forces to beat Covid-19 and help business flourish,” Ostros said.

The head of the European Union Delegation in Zimbabwe, Ambassador Timo Olkkonen, said the European countries were committed to supporting private sector investment in Zimbabwe.

“The new EIB cooperation with CABS will increase access to targeted business finance by companies across Zimbabwe.

By helping private sector resilience to Covid-19, the new €15m financing scheme will create jobs, unlock business growth and contribute to alleviating poverty in the years ahead,” Olkkonen said.

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