ZIMBABWE will finally begin drawing down the Commonwealth Development Corporation (CDC) $100 million loan facility by year end after Government resolved monetary and tax compliance issues that surrounded the maiden commercial line of credit from United Kingdom.
The credit line will be distributed through Standard Chartered Bank.
The development comes at a time when various companies are facing closure or serious operational challenges due to foreign currency shortages.
Essentially, this facility will be used for capital expenditure and for helping businesses to meet their day-to-day financing needs in food processing, manufacturing and agriculture sectors and in the process improve their competitiveness.
Reserve Bank of Zimbabwe deputy governor Kupukile Mlambo told Business
Times that forex shortages were at their highest following the closing of the tobacco selling season and credit lines were critical in filling the gap.
“After a series of meetings with CDC top executives including its chief executive, Nick O’Donohoe, we resolved all the outstanding issues to enable the drawdown to start as early as possible to improve the competitiveness of the industry in Zimbabwe in terms of retooling and improvement of productivity.
“We expect facility drawdown to start before the end of the year and help manufacturing industry to buy critical raw materials, especially, in these times of forex challenges where tobacco season is closed…,” said Mlambo.
Under the agreement, Britain’s development finance institution would provide a $60 million offshore facility while StanChart would provide the $40million balance onshore.
And of the $60 million, $30 million is expected to start coming in December to help in manufacturing and agriculture.
This week alone, National Foods closed its two flour mills in both Harare and Bulawayo while Sakunda Holdings has also closed its logistics department as forex shortages continue to weigh down business.
Mlambo said the CDC facility will be increased and spread to other banks only if the current deal is done accordingly and other interested banks comply with the CDC criteria.
The CDC team is said to have expressed interest in investing in solar farm projects in Zimbabwe and the full potential of the sector.
Meanwhile, Confederation of Zimbabwe Industries president Sifelani Jabangwe said this significant development would go a long way in reviving companies in the country.
“We think the much awaited CDC facility will improve the competitiveness of industry in Zimbabwe in terms of retooling and improvement of productivity,” Jabangwe said.
He said the loan was a sign of confidence and seal of approval or endorsement of Government policies and measures aimed at transforming the economy into a middle income by 2030.