The fresh six-year US$30 million line of credit was extended at a signing ceremony in Harare on Friday. Agribank chief executive Somukosi Malaba said it was the first major financial package proffered to the bank since the unity government was formed two years ago.
The funds will be made available to “critical” industries including food processing, agro-processing and indirectly to the farmers. Of the $30m, $20m will bankroll agriculture-related activities and $10m will provide liquidity to the IDC of Zimbabwe.
“The facility should lead to job creation and will also help increase agricultural productivity by improving access to inputs at affordable prices by farmers,” Malaba said. “It will also address the general lack of liquidity that has resulted in the absence of clearly defined funding for agriculture from the banks.”
Finance minister Tendai Biti said the credit line would help the economy, vandalised by years of economic contraction and hyper-inflation, to recover. He said the line of credit was the first deal secured after the signing and ratification of the Bilateral Investment Promotion and Protection Agreement (BIPPA) between South Africa and Zimbabwe.
“It addresses the challenge of limited lines of credit and the lack of long-term financing within the economy,” he said.
Western donors, who are expected to provide the bulk of funding for Zimbabwe’s economic recovery, have demanded broad economic and political reforms, forcing Zimbabwe to look to neighbouring countries for help. Two weeks ago, Zimbabwe entered a $70million deal with Botswana that will bankroll Zimbabwean industry with loans at concessionary rates.
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