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Harare Bureau
CBZ Bank has received a cumulative $545 million from the African Export and Import Bank (Afreximbank) since 1998 for on-lending to local companies. CBZ Holdings group chief executive Dr John Mangudya said that the financial assistance CBZ received had enhanced liquidity and minimised funding challenges in the economy.
About $242 million of the amount CBZ Bank received was consummated in the last two years while $203 million of the funds was still locked up in running facilities.
Dr Mangudya hailed Afreximbank’s committed assistance in Zimbabwe’s economic recovery saying if the bank withdrew its funding there would be a suffocating liquidity crisis and closure of companies as a result.
He made the remarks in an interview with Herald Business after Afreximbank last month conferred CBZ Bank with a financial institutions award (gold category 2013) in recognition of the country’s largest bank’s exceptional contribution to its mandate and corporate goals.
The award is given after every two years to the best performing financial and non-financial institutions compared against several others from the entire continent.
Former heads of states, ministers, bankers, business community and Zimbabwe ambassador to Ethiopia Andrew Mtetwa attended the glamorous awards ceremony, which coincided with Afreximbank’s 20th anniversary.
Afreximbank’s financial institutions award focuses mainly on exceptional contribution in the financing of African trade.
“Cumulatively we have drawn down $545 million from Afreximbank and in the current period we have $203 million facilities that are currently running,” he said.
Dr Mangudya said CBZ Bank, which received the award on 28 June in Addis Ababa for its exceptional contribution to Afreximbank’s mandate and corporate goals has been getting the funding at a fairly reasonable cost.
Beneficiaries of the funding that CBZ Bank accessed from Afreximbank ranged from food production in the manufacturing sector to horticulture, transport, seed and oil companies.
The funding has enabled the companies to continue producing and has given them the impetus to grow, without which most of the companies would have been forced to close.
The draw downs CBZ Bank made on Afreximbank facilities have been growing exponentially over the years from the initial $10 million in 1998 to an annual average of $25 million, $60 million and now $203 million.
CBZ Bank has contributed significantly to providing liquidity in the domestic economy by arranging affordable medium term structured finance facilities for companies at a time most loans are fetching prohibitive rates.
Dr Mangudya spoke highly about Afrexibank’s support to Zimbabwe and CBZ Bank in particular saying this had improved liquidity in an economy with just about $4 billion deposits, which significantly minimised funding constraints because of increased money in the economy.
Dr Mangudya said that in obtaining funding from the Pan-African Bank, CBZ Bank was driven by the structure of funding that its customers required as most of the loans from Afreximbank were medium term as opposed to short term facilities offered by banks from local deposits.
The CBZ chief was confident that the bank would in future be able to win Afreximbank’s ultimate prize, the platinum award, considering exceptional loan repayment by its clients. Gold was the highest prize awarded this year.
Out of several banks drawn from across the continent, Afreximbank found CBZ to be the winner of the financial institutions gold award due to its large utilisation levels of the bank’s funds and its outstanding repayment record.
Dr Mangudya said in celebrating its gold award CBZ Bank was most grateful to its customers who have repaid the loans they received without fail, which enabled the bank to meet its obligations in terms of paying interest, the principal amounts and other charges.
The bank said it would continue to facilitate structured funding facilities to assist deserving firms as it believed that Zimbabwe holds immense potential for economic turnaround.
“Going forward we are here to stay and we are here to assist our clients and make sure that the little that we can do is done and done according to customers expectations,” he said.
At a time Zimbabwe has a high risk profile, Dr Mangudya said Afreximbank saw opportunities where others, especially Western multilateral financial institutions, saw risk.
He added that Afreximbank was attracted by structured finance facilities meant for specific and proven business requirements endorsed by CBZ Bank, which mitigated the risk of the eventual beneficiaries failing to repay the loans.
Online Reporter