shloboe boe
Judith Phiri, Business Reporter
THE Zimbabwe Investment and Development Agency (Zida) has urged both new and existing investors to take advantage of the Targeted Finance Facility (TFF), a funding initiative designed to provide affordable loans for the agriculture, manufacturing, and mining sectors.
The move is expected to accelerate economic growth by enhancing production, capacity utilisation, and competitiveness in key industries.
The Reserve Bank of Zimbabwe (RBZ), early last month, rolled out the operational framework for the TFF, setting interest rates at 20 percent for banks borrowing from the central bank and a maximum of 30 percent for on-lending to customers.
The cap is significantly lower than the average corporate lending rate of 43 percent per annum, offering businesses a much-needed financial reprieve, according to the Monetary Policy Committee (MPC).
The facility was established following the realisation that commercial banks were lacking the capacity to adequately finance productive sectors, a situation that could hinder economic growth.
In an investor bulletin, Zida said with the economy projected to grow by an impressive six percent in 2025, ensuring adequate funding for working capital has become paramount.
“Regarding the TFF, the agency wishes to advise existing and new investors as well as other relevant parties as follows, this is concessional funding meant to boost production and capacity utilisation, leading to economic growth.
“The cheap facility lowers production costs and improves the competitiveness of local products and local products get more shelf space, while accessing the facility may improve export competitiveness and leading to higher export earnings,” reads part of the bulletin.
The agency said the cheap facility may improve margins and profitability for local companies, while those wishing to access the facility may do so by approaching their banks to start the application process.
The targeted sectors are agriculture, manufacturing and mining. The TFF loans have a maximum 270-day maturity and must be repaid in full by the due date or earlier.
Borrowers can access funds in Zimbabwe Gold (ZiG) and have the option to repay in the same currency or foreign currency at the prevailing exchange rate.
“Banks will borrow funds from the RBZ at an annual rate of 20 percent, with a cap of 30 percent per annum on the all-inclusive interest rates they can charge customers,” said the central bank.
“The interest rate structure is designed to strike a balance between affordability for borrowers and responsible risk management for lenders. To maintain transparency and affordability, no additional charges will be permitted,” said the RBZ in launching the facility.
The RBZ also noted that interest rates could be reviewed periodically by its Monetary Policy Committee.
The TFF will have stringent collateral requirements, demanding acceptable security from banks and can be secured by a diverse range of assets and instruments.
These include foreign currency, Gold-backed Digital Tokens or any other central bank instruments, foreign currency-denominated Treasury bills with less than one year to maturity, local currency Treasury bills with less than one year to maturity and any other collateral acceptable to the RBZ.
“Banks will take the credit risk of the ultimate beneficiaries and should therefore do thorough credit assessment and customer due diligence,” said RBZ.
It also stressed the importance of aligning loan sizes and repayment terms with the specific business cycles of borrowers to maximise the facility’s impact.
Online Reporter