ZIMBABWE – The European Investment Bank (EIB) has unveiled a €15 million (US$18 million) seven-year facility to Zimbabwe’s biggest mortgage lender, CABS, a member of Old Mutual Group, to bail out thousands of firms that have been affected by COVID-19.
The intervention is part of EIB’s strategy to scale up interventions across African markets to build resilience in the region’s companies during the pandemic.
It is part of an approved response strategy unveiled by European Union (EU) finance ministers after the COVID-19 outbreak in 2020.
Speaking at a signing ceremony yesterday, EIB vice-president Thomas Östros said extending bailouts to companies was one of the best ways of addressing the uncertainties that have affected the Zimbabwean market since the outbreak of COVID-19 last year.
“Ensuring access to finance by Zimbabwean entrepreneurs and businesses is essential to overcome business uncertainties and economic challenges enhanced by COVID–19,” he said.
“As part of team Europe, the European Investment Bank is pleased to announce €15 million of the 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,” the EIB boss added.
Under the transaction, CABS will over the next seven years release fresh private sector funding, including to small-to-medium enterprises.
The funding carries long tenures to give firms room to rebuild and expand their operations.
“Companies and communities across Zimbabwe have been impacted by the COVID-19 pandemic,” CABS managing director Mehluli Mpofu said.
“CABS is committed to supporting private sector investment in Zimbabwe and enabling corporate, business and agricultural clients to invest for the future and create economic opportunities. The new €15 million European Investment Bank backing for CABS will unlock new private sector financing to be provided by our branches across the country to private sector businesses,” he added.
“The close co-operation 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,” concluded Mpofu.
“Ensuring access to finance by Zimbabwean entrepreneurs and businesses is essential to overcome business uncertainties and economic challenges enhanced by COVID–19”Thomas Östros – EIB vice-president
He added that this would also ensure that Zimbabwe benefits from the EIB’s rapid response to strengthen economic resilience against COVID-19 across Africa.
EU ambassador to Zimbabwe, Timo Olkkonen said the public sector did not exist in a vacuum, adding that the private sector was also important for economic growth.
“In Zimbabwe, the private sector faces many challenges. I do not need to enumerate all these here. We, indeed, encourage the government of Zimbabwe to address the bottlenecks that the private sector is facing in Zimbabwe and indeed engage in serious reforms which will include also fighting corruption and increasing transparency, promoting robust rule of law and creating a level playing field for businesses to operate.”
The envoy said this would be the best way to encourage both domestic and foreign investment in Zimbabwe.
Some of the challenges facing the private sector include high taxes, corruption, high levels of foreign currency retention by the central bank, high inflation, shortages of foreign currency, bureaucratic red tape and policies hampering the ease of doing business.
In 2020, the government of Zimbabwe unveiled a US$18 billion package to bail out firms affected by the pandemic, but most companies say they are yet to receive the funding.
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