US$1,5bn package: The details

THE US$1,5 billion package from the Africa Export-Import Bank (Afreximbank), which was availed in December last year, will be used to stimulate the economy by providing investment guarantee, supporting exports as well as easing foreign currency shortages.

US$1 billion will be used to lure foreign investment by providing risk insurance guarantee.

The remaining US$500 million will be used to import foreign currency, a move that is expected to ease its shortages.

This will aid the importation of essential raw materials and facilitate exports for more generation of foreign currency.

Foreign direct investments are expected to increased production in the economy and generate jobs.

Zimbabwe is expecting an influx of investors in all sectors of the economy following the ushering of a new Government last year.

Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, said the two banks are finalising the facility’s modalities.

“US$1 billion is for the provision of guarantees to investments which are expected to be coming into the country,” he said.

“It is, therefore, expected to generate more than US$1 billion in foreign direct investment in different sectors of the economy during the course of the year.

“The foreign direct investment will generate downstream benefits such as jobs, exports and increased production in the economy.

“US$500 million is earmarked for liquidity support. This amount will be used to facilitate the importation of cash, importation of essential raw materials as well as on-lend to the export sectors of the economy, so as to generate the much needed foreign currency to benefit the monetary environment and the rest of the economy in terms of increased forex liquidity.

“The Afreximbank and the Reserve Bank are seized with the necessary processes. As soon as we are through with the processes, we will be making the necessary communication to the country.

“Further, Afreximbank and the Reserve Bank are working on finalisation of documentation for the US$150 million letters of credit confirmation which will be used to support importation of critical imports such as fertilisers, medical drugs, fuels, crude oil for cooking oil, soya beans and other raw materials for industry.

“The pricing of all the Afreximbank facilities is competitive, benchmarked to international standards and within the stipulated thresholds of such borrowings for the economy.”

Dr Mangudya also revealed that disbursements under the $600 million nostro stabilisation had already began.

The $600 million facility was extended to Zimbabwe to meet its requirements for foreign currency payments.

“To date, US$450 million from the $600 million facility has already been disbursed through the RBZ. Funds received under the facility are being used to finance the importation of fuel, electricity, medicines, fertilisers, agro-chemicals, crude oil for cooking oil, soya beans, critical industry requirements and raw materials as well as cash,” he said.

Dr Mangudya said the facility was designed to cushion the country during the period before tobacco auction floors open.

Over the past few years, foreign investors have been shying away from the country, citing unfavourable investment policies. However, some of the laws, including the indigenisation policy, are being amended, a move that has seen a number of investors looking towards Zimbabwe. During his recent visit to Davos, President Mnangagwa met several high profile business people who expressed interest in investing in Zimbabwe.

The President continues to meet keen investors from around the globe, including those from The United Kingdom, United States of America and Australia

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  • Cde Mzvinavhu(Prof)

    Encouraging developments.

  • Citizen

    The package is sounding like history, when will it manifest? Bank ques still existing, withdrawals still at $50. Time to the bank must be from 8:00 am, but in some places, people are actually sleeping there, outside pavements. Will is making us live in the future, yet the present is bad.

  • SlackJawedYokel

    Aaah!

  • Chihombori

    who audits this afreximbank,i dont think these measures work..you place 1 billion dollars as insurance gaurantee on the hope that same or more will be invested ,the question is why would you pay more to safeguard investor risk when there is nothing concrete on the ground ,should you not rather use the funds to jump start local businesses,and in so doing allow funds to flow in the system..to curb against investor risk ,it means you are paying into a fund ,that money remains sitting ,and yet you pay interest ..to whom ,and by what criteria did you benchmark a billion dollars as insurance money..this is looooting .we are not dumb.
    if 450 was used ,of the 600m ,what benefits accrued to the economy in terms of the economic reason,based on the multiplier effect on a ratio of 0.5 even 0.4 to the dollar pumped into the econmy,if the answer is zero ,then it was not 450m ,but far less like 100m supplied ,that would still result in long quez,as the deposit multiplier regresses mostly in an informal economy ..,kazimbabwe is a 5-7b dollar economy its a lot of money 450m ,we are talking 7billion rand injected in this economy ,who can tell us if such an amount is injected ,the rand will not fall in price pa copacabanna,moreso prices in shops..so makatibira mari yedu futi monyepa moti mugabe,these were the funds used to oil the defence machiney running up to the coup(chinamasa FM)..please stop lying to us ..i urge a thorough investigation of afreximbank,its a rogue bank full of criminals who are benefiting from undercuts and commissions from this ED government ..the economics and maths dont make sense..1.5 billion ,like 15billion disapering before our eyes ,and what do we do follow him on facebook ,and listen to ED funny speeches #ED is my vote my foot.