BY TATIRA ZWINOIRA
The Reserve Bank of Zimbabwe (RBZ) is negotiating fresh lines of credit worth US$500 million to help industry import raw materials and produce cheaper goods, a cabinet minister has said.
“There are lines of credit that the RBZ is working on and I think it’s at advanced stages to get those. It is somewhere up to around US$500 million, but it will be between the individual companies and the Reserve Bank. In terms of how much is accessed, it will be on a business to business basis,” Minister of Industry and Commerce Mangaliso Ndlovu told NewsDay in a telephone interview yesterday.
A pressing foreign currency shortage has seen prices of basic goods rise regularly as industry resorts to the parallel market to source money to import raw materials.
RBZ governor John Mangudya confirmed the arrangement to NewsDay.
“Yes government, through the Reserve Bank, is putting in place a US$500 million facility to underpin the interbank bank forex market on a willing-buyer-willing seller basis. It’s coming from a regional Pan African Bank,” he said.
Mangudya did not specify the name of the bank, but the source of the funding is most likely the Africa Import and Export Bank (Afrexim).
The governor, who is a former employee of the bank, has over the years used his relationship to secure funding for Zimbabwe at a time no other international financial institution is willing to do so.
“But, we are also working with South Africa because they have said if we have companies that are procuring raw materials from them and also those who export to South Africa, but mainly those who are procuring, ‘we are working on a facility for them to be able to access trade credit or lines of credit for purposes of trade, which will then graduate for purposes of retooling’. The minister of Finance (Mthuli Ncube) is working on that,” Ndlovu said.
He added that talks were also underway to secure a trade credit facility from Botswana in two to three months from the inaugural Zimbabwe-Botswana Bi-National Commission held in February.
“Get it from me that was agreed at a higher level. I really don’t want to comment much about it as it (because) actually the President (Emmerson Mnangagwa), who worked on that one. I think in the fullness of time it will be well published,” Ndlovu said.
However, industry has complained that suppliers now want upfront payments and were no longer giving out fresh lines of credit due to companies defaulting on paying them resulting in legacy debt running into the hundreds of millions.
Ndlovu said: “You have to be careful what role government plays. We do not want to overcommit, especially to individual transactions. Yes, there is a bit of a confidence issue at the moment and also the exchange rate is weighing in.”