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US$1,5bn package: The details

04 Feb, 2018 - 00:02 0 Views
US$1,5bn package: The details

The Sunday Mail

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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