Zim ropes in Afreximbank on Vic Falls hub

NDAMU SANDU IN DURBAN, SOUTH AFRICA

The African Export-Import Bank (Afreximbank) is working with the government to turn Victoria Falls into a financial hub as part of measures to lure investments into Zimbabwe, the bank’s president Benedict Oramah has said.

The Cairo—headquartered financial institution has been Zimbabwe’s all-weather bank providing loans and facilities at a time other financiers have turned their back on the southern African economy due to its inability to service debts.

“There is a project going on to turn Victoria Falls into a financial sector hub. We are working with the Ministry of Finance and the Zimbabwe Investment and Development Agency to execute this project,” Oramah told Business Times on the sidelines of an Intra-Africa Trade Fair.

The government wants to set up an Offshore Financial Services Centre in Victoria Falls. A foreign currency only bourse, the Victoria Falls Stock Exchange (VFEX) began trading last year to raise capital for local funds. The government has rolled out incentives to encourage new listings on the bourse.

In September, VFEX signed a Memorandum of Understanding with the Dubai Gold and Commodities Exchange (DGCX) as the foreign currency-denominated bourse eyes commodities trading.

Under the agreement, the DGCX will extend technical support, knowledge and skills to VFEX, with the ultimate aim of establishing an international commodities exchange in Zimbabwe. VFEX will seek support from the DGCX in framing a clearing and settlement commodities exchange framework. The collaboration will also pave the way for possible investments by DGCX into the VFEX Commodities Exchange.

Oramah said the US$1.5bn ZimOpen initiative has helped to attract investors and financiers.  The initiative is aimed at de-risking eligible inward investment into Zimbabwe, catalysing trade finance inflows and increasing the availability of US$ liquidity in order to assure investors of more predictability in exit possibilities and terms.

“It [ZimOpen] increases the menu of risk sharing facilities that we have put in place to support Zimbabwe to attract foreign direct investment. We did the Beitbridge project that was under the ZimOpen arrangement to guarantee those investments that have turned Beitbridge around,” Oramah said.

In March, Afreximbank approved a US$70m facility to finance the expansion and upgrade of the Beitbridge border post in Zimbabwe.

The bank authorised a US$43m senior term loan facility to Zimborders Mauritius Ltd and the issuance of an Investment Guarantee of US$27m supporting Pembani Remgro Infrastructure Fund to join other investors in Zimborders Mauritius Ltd.

The financing facility formed part of a US$204.4m syndicated senior term loan facility for which Afreximbank was among a consortium of financial institutions acting as mandated lead arrangers and senior debt lenders.

The Beitbridge border post upgrade project, which is a public-private partnership, is the first of its kind in Zimbabwe and funded by African financial institutions that have come together to provide commitments in the syndicated senior term loan facility. In addition to Afreximbank, other participating financial institutions include the FirstRand Bank Limited, ABSA Limited, Nedbank Limited, Standard Bank of South Africa and The Emerging Africa Infrastructure Fund.

The upgrade will include the procurement of technical equipment and software, thus modernising the border post to ensure smooth service during the concession period. In addition, investments will be made in Beitbridge town, including developing a fire station, residential building units, housing sewer lines, housing electrical supply lines, a reservoir, water pipelines, a wastewater treatment plant, a water pump station and other infrastructure.

Beitbridge Border post is the busiest border post in Southern Africa by way of movement of people and commercial traffic.

Oramah said the bank is supporting the economy through programmes and facilities, “working with the Reserve Bank and many financial institutions through which we are delivering guarantees and loans for trade and projects in Zimbabwe”.