The deal was arranged by South Africa’s Musa Capital and Zimbabwe’s Neverseez Capital and the signing took place on March 18. This was the first transaction of its kind since the signing of the Bilateral Investment Promotion and Protection Act (BIPPA) between South Africa and Zimbabwe in 2010, the statement said.
AgriBank said it would use the six-year term facility from the IDC to on-lend to its blue-chip and medium-sized clients, some of which were listed on the Zimbabwean Stock Exchange – with a focus on increasing their production capacity. However, US$20 million of the facility was allocated to firms who operated in the agri-business, manufacturing, and mining sectors while US$10 million would be on-lent to the Industrial Development Corporation of Zimbabwe.
The loan was structured to ensure that a large portion of the funding would be used by Zimbabwean companies to purchase South African goods and services. The IDC facility will, therefore, also provide revenue opportunities to South African firms, the parties said.
Because it will help to induce productive capacity in several key sectors, we see the IDC facility as a watershed transaction, Zimbabwe’s finance minister, Tendai Biti commented. Somkhosi Malaba, CEO of Agribank, agreed that the transaction was significant in addressing the disablement of the banking sector resulting from the past 10 years of the country’s economic history.
Post published in: Economy