US$50m for local firms
Friday, 06 May 2011 22:21
THE African Export and Import Bank has raised US$50 million through issuing of bonds on the international market to support Zimbabwe's export firms and pledged to continue financing the expansion of the country's productive capacities.
Officially opening the 52nd Edition of the Zimba-bwe International Trade Fair in Bulawayo yesterday, the bank's president, Mr Jean-Louis Ekra, who was the guest of honour, said the US$50 million was for medium term funding.
The event was attended by the Head of State and Government and Commander-in-Chief of the Zimba-bwe Defence Forces, President Mugabe, Govern-ment officials and ZITF management among others.
The Cairo-based financier has so far advanced a cumulative US$450 million to the country's private sector.
Afreximbank and the Preferential Trade Area Bank are the two financial institutions that have continued supporting Zimbabwe during the 10 years of economic recession when the International Monetary Fund and the World Bank withdrew support programmes in the country.
"On its part, Afreximbank, a clear success story of partnerships, will continue to finance the expansion of productive capacities of Zimbabwe's export sector through its various financing programmes and facilities.
"The bank has successfully raised medium term funds in the international financial market through a US$50 million issue. These funds will complement other financing programmes already in place, such as the Zimbabwe Economic and Trade Revival Facility and various lines of credit," said Mr Ekra.
Mr Ekra also commended the macro-economic stability in the country brought by the introduction of the multi-currency system in 2009.
He said the positive indicators provided a basis for a successful implementation of economic growth policies needed for a rapid positive transformation of the country's economy and its people.
Over the past two years Zimbabwe has managed its inflation levels to a single digit level of 2, 7 percent as of May 2011.
Positive gains have also been attributed to the pursuit of sound macro-economic policies, improvements in the banking sector and enhancement of the supervisory role of the Reserve Bank of Zimbabwe.
"These significant achievements, which were made on the back of one of the severe global economic crises in recent history, reconfirms the benefits of political stability and prudent economic management in driving economic development and human welfare. It also shows the resilience of the Zimbabwean economy," added Mr Ekra.
This year's exhibition was running under the theme "Optimising Business Synergies, Now and Beyond" and attracted participants from Germany, Indonesia Turkey, Ghana and South Africa. The mix of participants is expected to foster the expansion of South-South cooperation through the trade fair.
ZITF, the country's premier trade showcase, recognises trade as an important engine for economic growth and development.
Mr Ekra noted that trade remained the major driver of economic growth through increased and efficient utilisation of resources as a result of specialisation and large-scale production.
"African governments, Zimbabwe included, therefore have the responsibility to ensure that trade remains at the top of their development agenda.
"We, however, recognise that, Africa's efforts at increasing its share of world trade had been hindered by many challenges, including the continent's heavy dependency on primary commodities whose prices are highly volatile and susceptible to circular trends in international commodities markets, lack of diversification and adequate infrastructure," said Mr Ekra.
He added that the situation was further aggravated by the low level of technological know-how and domestic research capacity, limited access to much-needed external finance, limited market knowledge and information and limited government support for trade among other constraining factors.
Earlier President Mugabe toured the stands at the ZITF. - Bulawayo Bureau/Herald Reporters
Labels: AFREXM
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Bank invests US$400m in Zim
By Bright Madera
THE African Export and Import Bank has invested a cumulative US$400 million into the Zimbabwean economy since the beginning of the year, a senior official has said. Afreximbank regional manager (Southern Africa), Mr Gift Simwaka told Herald Business that the amount is shared between the Government and the private sector.
“Since the beginning of the year, I can say we disbursed approximately US$400 million cumulatively. We have provided direct facilities to cotton farmers and miners and we are working on a new scheme to finance the telecommunication sector,” said Mr Simwaka.
Afreximbank is one of the regional financiers, which has continued to support Zimbabwe despite the country’s deteriorating credit worthiness.
Last month, the bank in partnership with the Government unveiled a US$100 million line of credit facility and the partners have since selected four banks to initially disburse US$25 million.
Mr Simwaka said Zimbabwe requires a sizeable amount of money to revive the economy but the long journey has to start somewhere, thus coming up with the US$100 million loan facility.
In February this year, the bank unveiled a US$150 million loan facility to mining houses meant to upgrade their infrastructure.
The facility was unveiled under the financial institution’s sponsored Precious Metals Export Backed Prepayments Facility “designed exclusively for Zimbabwean gold and platinum producers”.
Zimbabwe immediately requires an estimated US$2 billion to recapitalise companies to boost production from current levels of about 45 and 55 percent on average.
Mr Simwaka added that the bank would continue to support Zimbabwe and more loan facilities would be unveiled as and when the funds are available.
There is a strong demand for working capital in Zimbabwe as the country is recovering from the decade long economic recession.
Shortages of liquidity on the domestic and international markets have made it very difficult for the country, which is perceived to have a significant sovereign risk and a lower credit risk rating, to access the much needed funds for capitalisation.
Meanwhile the Cairo-based lender is working on a country risk guarantee facility and they are also working on a comprehensive framework to improve the country’s credit worthiness.
Early this year, the bank announced that it had budgeted US$1,2 billion for infrastructure development in Africa and Zimbabwe still stand a chance to benefit from these funds.
Afreximbank has also agreed to guarantee the raising of US$50 million, through Diaspora bonds to fund projects identified under the country’s economic revival plan.
By close of the year, it is estimated that the bank would have invested US$600 million into the country as one or two more facilities are expected before year-end.
Labels: AFREXM, BANKING, GIFT SIMWAKA
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Ekra urges innovative financial instruments
By Fridah Zinyama
Thu 26 Nov. 2009, 04:00 CAT
AFRICAN Export-Import Bank (Afreximbank) president Jean-Louis Ekra has said there is an urgent need to continue developing innovative financial instruments to support the rapidly expanding trade and investment flows between Africa and its trading partners.
During the just-ended two-day annual Afreximbank seminar on advanced structured trade finance at Intercontinental Hotel in Lusaka on Tuesday, Ekra said there had been growing trade between Africa and countries in the South like Brazil, India and China given the enormous benefits their rapidly expanding markets offered African traders.
“There is also need to improve efficiency and reduce the risks associated with the financing of African commodities in the absence of less risky state backed commodity boards and to grapple with adverse effects of foreign exchange and commodity price volatilities in international markets,” he said.
Ekra said there was also need to support national efforts at promoting local content in Africa’s extractive industries and also to expand local currency financing as many African economies stabilised.
“This will help to enhance or facilitate Africa’s participation in the emerging global carbon markets through the development of deal structures that rely on the sale of carbon credits arising from Clean Development Mechanism (CDM) projects,” he said.
Ekra further said there was also need to develop a banker’s acceptance market as a vehicle for promoting intra-Africa trade and to promote an African Letter of Credit and Correspondent banking arrangement so that African banks could help African traders to compete in the international market, among other agencies.
“It is in consideration of the forgoing that this year’s seminar programme seeks to deepen participants understanding of innovative instruments and structures that could be deployed to address some of challenges and the opportunities they offer African entrepreneurs,” said Ekra.
Labels: AFREXM, FINANCING
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AFREXM, PTA bank sign $50m deal for mining services firms
By Fridah Zinyama
Tue 24 Nov. 2009, 04:00 CAT
AFRICAN Export and Import Bank (AFREXM) and Eastern and Southern African Trade and Development Bank (PTA) Bank have signed a US$ 50 million facility for mining services companies in Zambia.
And Bank of Zambia (BoZ) governor Caleb Fundanga has revealed that Zambia has been providing finances to Zimbabwe during the difficult period that the neighbouring country has been going through.
Meanwhile, finance minister Situmbeko Musokotwane said poverty in Africa can only be eradicated through improved trade by African countries.
The facility which has been structured and originated by ALS Capital Limited, a leasing and corporate financial advisory company and Calag Capital Limited, an investment banking firm of Lagos Nigeria, is expected to assist major players in the services and supplies sub-sector of the copper mining industry to execute contracts with the major mining companies.
During the 2009 AFREXIMBANK annual seminar on advanced structured trade finance in Lusaka, Dr Fundanga who was the chairperson for the seminar, said the mining services facility would be administered by Investrust Bank Plc.
“The facility will allow eligible companies access financing by assigning receivables for the execution of contracts such as extraction and transportation of waste materials, fuels, copper ore from pits to the smelting plants and contract mining,” he said.
Dr Fundanga said the facility would mark a milestone in the provision of financial services to the mines services contracting sector and would be availed at very competitive terms and interest rates in relation to current lending rates obtaining in the Zambian financial market.
“The first local company to benefit from the facility is Keren Motors Limited who have been granted a credit facility of US$ 20 million to purchase trucks and fuel tankers and mining equipment,” said Dr Fundanga.
And Dr Musokotwane said the answer to economic growth in African countries lay in improving trade in individual countries which had seriously been lagging behind in trade compared to other developing continents.
“And the only way companies in Africa can improve on trade is if commercial banks in their respective countries realise the importance of lending to trade related companies,” he said. “It is only when you start trading that you realise the major constraints which are involved like reducing the cost of doing business which is a challenge in most African countries.”
Dr Musokotwane gave an example of Zambia, a landlocked country which had a high cost of production making its products quite uncompetitive on the international or regional markets.
“For example, a Zambian company incurs 20 per cent transportation costs when it is either exporting or importing products,” he said. “This is why as government we have passed the Private Public Partnership law which is going to allow stakeholders to build modern facilities at our border areas to ease the trading process.”
Dr Musokotwane encouraged the banks represented at the seminar to consider investing in Zambia as a way to ease trading in the country, among other projects.
And Bankers Association of Zambia (BAZ) chief executive officer David Chewe said the business environment in the world had changed due to the global financial crisis.
He added that there was pressure by companies to survive owing to the global financial crisis.
“The marketplace has not only put pressure on lending margins, but a rising number of borrowers have also faced severe liquidity strains diminishing the possibility to access finance,” said Chewe.
“As bankers we need to be sensitive and aware of the changes in technology, globalisation of finance, shifting patterns of international trade and to the evolving needs of customers.”
Labels: AFREXM, CALEB FUNDANGA, MINING, PTA BANK
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