Sundaymail Editor
Business Reporter
BANKS are now ready to extend US dollar loans from the huge pool of foreign currency accounts (FCAs) balances in response to the supportive policy measures implemented by the Government.
A recent law passed by the Government ensures the multi-currency payment system will be used for the next five years.
It is believed the new legislation eliminated the risk previously associated with USD loans.
At the launch of the US$30 million horticulture export revolving facility last week, FBC Holdings group chief executive officer Mr John Mushayavanhu said banks now felt comfortable to lend from FCA deposits.
The recently unveiled facility, which is administered by a number of banks including FBC, CBZ, AFC and ZB, is guaranteed by the Government through the US$958 million Special Drawing Rights (SDRs) equivalent that Zimbabwe received from the International Monetary Fund (IMF).
The banks, Mr Mushayavanhu said, would lend more aggressively to horticulture farmers.
“We had on the one side farmers who had the expertise and land, and who had off-takers for the produce in markets such as Europe and elsewhere. These horticulture farmers would require money to put up a greenhouse . . .
“They want money to upgrade their pack-house so that they meet EU standards or standards of countries they are exporting to. They want the money, but banks were not willing to do so,” he said.
He indicated that this was the reason horticulture exports had dropped from a peak of US$300 million to US$77 million.
US dollar loan-to-deposit ratio is currently significantly low.
Export boost
Speaking at the launch of the horticulture revolving facility, Lands, Agriculture, Fisheries, Water and Rural Development Minister Dr Anxious Masuka said negotiations to export citrus to China were at an advanced stage.
“The protocol is now being finalised.
“We are looking at more export markets, re-establishing the old ones and taking back our market share from Ethiopia and Kenya so that we are known again as Zimbabwe that used to export those sought-after vegetables,” he said.
“If you went to the Amsterdam market, for example, you would find that on auction day Zimbabwean flowers were very much sought-after, so I am looking forward to an exciting future.”
The horticulture industry used to contribute 3,5 percent to 4,5 percent to Gross Domestic Product (GDP).
It generated US$125 million in export earnings at its peak in 2000.
Zimbabwe’s diverse horticulture exports were largely tropical, citrus and deciduous fruits, as well as various vegetables, tree nuts, avocados and cut flowers to European markets.
Presently, the industry contributes US$77 million to export revenue and employs about 18 700 people.
It is believed the recently launched facility had the potential to close the funding gap and spearhead increased productivity.
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