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THE Infrastructure Development Bank of Zimbabwe has secured a $10 million loan from the Industrial Development Corporation of South Africa for on lending to tourism operators. Disbursement to successful borrowers is expected to commence no later than June this year, IDBZ chief executive Charles Chikaura told Herald Business last week.
“In its latest endeavours the bank has signed a six-year line of credit with IDC South Africa in the sum of $10 million targeting the tourism and hospitality sector,” said Chikaura. “The facility is at very competitive rates in line with Government policy to lower lending rates for the productive sectors of the economy.”
Zimbabwe requires as much as $1,5 billion over the next five years to fully recapitalise, according to the Zimbabwe Tourism Authority. Last week, Finance and Economic Development Minister Patrick Chinamasa emphasised the need to upgrade tourism facilities to boost arrivals and enhance the recovery of the sector.
The industry demonstrated tremendous potential, particularly benefiting from the successful co-hosting of the 20th Session of the United Nations World Tourism Organisation General Assembly by Zimbabwe and Zambia last year. The sector however, still faces some challenges, key among them perceived country risk, poor connectivity of local destinations and absence of a revolving fund to support the hospitality industry especially small to medium enterprises and co-operatives in tourism.
Under the Zimbabwe Agenda for Sustainable Socio-Economic Agenda, government is targeting to grow the contribution of tourism to the gross domestic product from 10 percent to 15 percent next year. Last year, tourist arrivals rose by 2 percent to 1,83 million from 1,79 million 2012, according to ZTA.
Despite the increase, the arrivals are yet to reach the peak of 2,2 million tourists recorded in 1999.
Chikaura said IDBZ has now spread its wings into the region to mobilize further funding for on lending to Zimbabwean firms to meet their working capital and capital expenditure requirements.
IDBZ, a state-owned infrastructure bank, has been facing challenges in mobilising lines of credit as it remains under the sanctions list of the Office of Foreign Assets Control, an agency of the US Department of Treasury, and the perceived country risk.
However, despite the numerous challenges that the bank faces in the form of inadequate capitalisation and being an OFAC designated entity, it has recorded some positive achievements in the last three years. These include the successful capital raise by way of a bond issue to finance the Zimbabwe Electricity Transmission and Distribution Company’s prepaid metering power project to the tune of $30 million.
The bank also intends to float $100 million bond for housing development in the capital.
Online Reporter