ZIMBABWE’S largest bank CBZ has been extended loan facilities of more than $70 million by regional financier, the Trade and Development Bank (formerly PTA Bank) for on-lending to the private sector.
Acting Minister of Finance and Economic Development Walter Chidhakwa said last week that the country was in urgent need of long-term financing.
“I’m informed that the Trade and Development Bank (TDB) has extended facilities worth over $70 million to CBZ for on-lending to the private sector.
“This is highly commendable because the country requires relatively long-term facilities,” he said.
The facilities have different tranches with tenures of 36 months (three years) each.
Minister Chidhakwa also urged regional and international multi-lateral financiers to continue increase funding to the private sector, despite Zimbabwe’s public debt overhang.
“The country is struggling to mobilise meaningful international lines of credit due to the external debt standing at around $7,5 billion. I have been on record that most of the debt that is in arrears is largely public and public guaranteed.
“The private sector has been servicing its obligations. International and regional banks should therefore not punish the private sector for the sins of the public sector.
“Zimbabwe needs production, and it is the private sector that should drive this,” said the Minister.
Increased funding to the private sector would boost supply-side supports at a time when Zimbabwe’s manufacturing sector is operating below 50 percent, which does not bode well for long-term economic recovery.
The minister also said that it was critical for financiers in the region to target small businesses in view of their growing impact on economies.
“The private sector is the engine of the growth, the small and medium enterprises as well as informal sector are, however, increasingly becoming dominant in our economies. We, therefore, urge our development financial institutions to support these sectors because of their role in sustaining development in individual member states.”