RYAN CHIGOCHE
First Capital Bank (FCB) will start drawing down on the €12.5m facility extended by the European Investment Bank (EIB) before year-end to finance the SMEs and mid cap companies, an executive has said.
FCB chief finance officer, Fanuel Kapanje, said the lender was currently carrying out due diligence exercises on the borrowers.
“Naturally, with these lines of credit, when you get to the point of drawing down you have got an amount of due diligence that you have got to undertake on the downstream borrowers,” Kapanje told Business Times.
He said they have a pipeline of about €19.7m out of that €12.5m in place.
These are different customers that are at different stages of evaluation through joint processes between us and EIB and we expect drawdowns to start happening before the end of this year, Kapanje said.
“We would like naturally to underwrite or to partner with more financiers to bring in a lot more facilities that are able to support the exporter businesses that we have in our portfolio,” he said.
The executive said the facility was expected to bail out Zimbabwe’s underfunded SMEs as well as midcap companies.
He said the sustainability of the facility was expected to be guaranteed in the short term as the lender anticipated to get more foreign denominated revenue needed to meet their obligations in foreign currency.
For the beneficiaries the cost of the loan is going to be driven by the risk associated with each borrower, Kapanje said.
The EIB facility has a tenure of seven years and funding will be available in United States dollars through the existing First Capital Bank Limited network.
The facility is one of many that foreign banks recently offered to local banks.
The EIB facility is part of the Zimbabwe Private Sector Facility from the Impact Finance Envelope of Investment Facility, which is extended by EIB to a group of financial institutions located in Zimbabwe.
Local companies have been struggling to access patient capital at a lower cost as the foreign currency auction has failed to meet their needs.
The local firms require capital for retooling to become competitive. However, local banks have been reluctant to offer long-term loans due to the short-term nature of deposits.
