Zimbabwe: European Investment Bank Credit Facility Indicates Confidence in Local Banks - Govt

Government has hailed the European Investment Bank's (EIB) €12,5 million credit facility extended to Zimbabwe through First Capital Bank (FCB) saying the development indicates rising confidence in the country's local banks.

First Capital Bank Limited in partnership with the EIB and the European Union Tuesday secured a developmental line which is set to develop eligible investment projects undertaken by Small to Medium Enterprises (SMEs) and MidCap companies under First Capital Bank Limited locally.

This credit line is part of the Zimbabwe Private Sector Facility from the Impact Finance Envelope of the Investment Facility (IF), that is extended by the European Investment Bank to a group of financial institutions located in Zimbabwe.

Addressing delegates on the occasion to mark the EIB Official Signing Ceremony, Finance Ministry's permanent secretary, George Guvamatanga said the collaboration confirms surging confidence in local banks.

"With EIB increasing its footprint, it is evidence of their confidence and trust in the abilities of our local banks.

"We are encouraged by this and look forward to more opportunities that can be availed to local businesses. It is up to us to exhibit our expertise and set up robust frameworks to ensure that maximum impact is realised through these efforts," he said.

He said the facility will provide a new channel for access to much needed long-term financing, cost effective lending and working capital relief that will allow our businesses to become more focused on growth and developing sustainable means to exploit ever available opportunities in our economy.

"We expect this intervention, amongst others, to have a positive direct impact on the productive sector which must result in sustainable import substitution and export stimulation, both of which should have a positive influence on the country's balance of trade," said Guvamatanga.

The remarks come at a time when the Reserve Bank of Zimbabwe (RBZ) has implemented a raft of measures since 2019 aimed at restoring confidence in the banking sector.

As a result, foreign currency deposits have been surging alongside international remittances on the back of unlimited access to deposits by the banking public.

Also speaking at the occasion, EIB's head of regional representation for Southern Africa, and Indian Ocean of the EIB, Jim Hodges said the Western financier is committed to support the country's business sector.

"The EIB is committed to ensuring that Zimbabwean entrepreneurs and businesses can invest through new cooperation with local financial partners.

"As part of Team Europe, the EIB is pleased to provide EUR 12,5 million of targeted financing to First Capital Bank Limited to accelerate private sector investment, create jobs and accelerate the post-pandemic recovery of Zimbabwe," he said.

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