European bank team to visit Zim

Oliver Kazunga Senior Business Reporter
A EUROPEAN Investment Bank (EIB) delegation will visit Zimbabwe next month to start negotiations for credit lines to the country’s banking sector, European Union (EU) Ambassador to Zimbabwe Philippe Van Damme said. The head of the EU delegation, who was in Bulawayo on Wednesday evening for a climate change and the economy event, said the international investor community has realised the potential in Zimbabwe.

He said this was evidenced by their increased number of trade missions into the country. “The investor community is increasingly interested in the potentiality of this country but they’re saying to unlock these potentialities we need to go a step further in reforms,” said Van Damme.

“And there has been a tremendous progress in terms of accepting the need for the reforms agenda. Some reforms have started in the banking sector . . . there has been a clean-up of the banking sector and the European Investment Bank (EIB) on that basis is planning to come back.

“They’re coming back for a mission in October to make an update of the financial sector assessment and to start negotiations with domestic banks to see to what extent they can extend credit lines to local banks for on-lending to small and medium enterprises in Zimbabwe and investment credit on three to five years, which is missing a little bit in this country.”

He said it was too early to start commenting on how much the EIB would extend to Zimbabwe. Van Damme said the release of the credit lines to the local financial sector would be a function of the needs assessment mission. “And of course not all reforms would be in place when the EIB visits Zimbabwe. But it’ll be progressive re-engagements, which we hope the government will be going to Lima, at four meetings of the International Monetary Fund (IMF) and the World Bank, to present its reform agenda thus, additional impetus would be given to the reform agenda and these will accelerate the process of reforms and of re-engagement of the international community,” he added.

The IMF delegation that visited the country early this month to review progress made towards reforms under a Staff Monitored Programme (SMP) has said it was impressed by Zimbabwe’s commitment towards implementing agreed reforms.

The SMP is an attempt to rebuild relations that could eventually lead to Zimbabwe enjoying support of the international financial institutions such as the World Bank, IMF and the African Development Bank. The country is in dire need of funding of up to $27 billion for its various economic turnaround projects under the government’s blue-print, Zim-Asset. To that end the country is implementing a number of investment reform measures aimed at stimulating both local and foreign investment. These include legal and policy reforms that seek to enhance the ease of doing business.

The IMF has been impressed by steps towards liberalising the labour market and ongoing restructuring processes in government finances. Zimbabwe is saddled with a debt burden of close to $10 billion and has engaged the IMF on the SMP on a roadmap that is expected to eventually lead to debt clearance and access to international financial markets to rebuild the economy.