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Business Reporter
THE signing of the CABS €15 million (about US$18,15 million) in long term finance from the European Investment Bank (EIB) to help local firms recover from the negative impact of Covid-19 has been described as a big deal for the private sector.
The historic funding agreement, the first such commercial facility by EIB to a local bank, is set to potentially open more avenues for additional support from EIB for Zimbabwe, industry leaders have said.
The package was announced at a virtual ceremony in Harare on Wednesday, which was attended by CABS managing director Mr Mehluli Mpofu, EIB vice president Thomas Östros, EU Ambassador to Zimbabwe Timo Olkkonen and EIB new regional representative for Southern Africa, Mr Jim Hodges.
The private sector financing is expected to help businesses most impacted by Covid-19 and forms part of EIB’s rapid response across Africa to strengthen resilience to the pandemic.
Mr Mpofu said businesses and communities around Zimbabwe have been impacted by the pandemic and that his institution was committed to supporting the private sector.
“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 businesses,” he said.
“The close cooperation between CABS and the EIB financial experts over recent months will transform access to longer term loans in foreign currency essential for Zimbabwean businesses to grow during the challenging (Covid-19) times.”
Mr Östros said the financing would ensure access to funds by local businesses, essentially to cover uncertainties and challenges brought by the Covid-19 pandemic.
“As part of team Europe, the European Investment Bank is pleased to announce a €15 million of new targeted financing to CABS with the aim to provide liquidity to sustain jobs amid the pandemic and to strengthen private sector investment and create jobs in the post pandemic recovery of Zimbabwe,” he said.
Commenting on the development, prominent industrialist and Zimbabwe Investment and Development Agency (ZIDA) chairman, Mr Busisa Moyo, said the signing of the loan facility was good news to the private sector.
“Zimbabwe has not received multilateral debt finance or credit from the EU in 22 years.
“So, yes receiving €15m credit line for CABS targeted at the private sector is a big deal. It’s also a signal statement that there’s more where that came from,” he posted on his Twitter account.
CABS and the EIB, said in a joint statement on Wednesday that the loans will allow the former to provide Covid-19 recovery and longer US dollar loan tenures to business operators in Zimbabwe.
Mr Mpofu said companies and communities around Zimbabwe have been impacted by the pandemic and that CABS — the banking unit of financial services behemoth Old Mutual Zimbabwe — was committed to supporting the private sector.
The EIB is the world’s largest international public bank, owned by its member states. Last year, EIB provided €4,7 billion for private sector investment across Africa.
The EIB financed energy, water, telecoms and industrial investment in Zimbabwe between 1982 and 1999 and its comeback is seen as a positive development, at a time the Second Republic has embarked upon an engagement and reengagement drive.
Relations between Zimbabwe and the European Union, have for close to two decades been souring on account of the successful Land Reform programme the country embarked on in 2000, which saw Britain and her allies imposing illegal economic sanctions on the nation.
When the Second Republic led by President Mnangagwa came into power in November 2017, the Government had adopted an international re-engagement policy to restore relations with the rest of the global village.
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