AfDB’s approval of US$ 25 million Trade Finance Facility to CABS to boost Zimbabwe’s local firms
OREANDA-NEWS. The Board of Directors of the African Development Bank (AfDB) approved a US $25 million Trade Finance Line of Credit facility to Central Africa Building Society (CABS) of Zimbabwe on April 20, 2016. This medium-term facility will help to support the expansion of CABS’ operations as a provider of trade finance to local firms as well as Small and Medium-sized Enterprises within Zimbabwe’s tradable sector.
The resultant credit support will provide for the importation of critical inputs such as agro chemicals, pesticides, farm machinery, spares and equipment, which Zimbabwe is in dire need of to revive its agricultural and manufacturing sectors. The credit support will also foster financial sector strengthening and generate more tax revenue through import duties and higher corporate profits. Including roll-overs, it is projected that the facility will finance approximately USD 150 million of trade over a three and half year period.
This facility contributes to scaling up of AfDB’s interventions in supporting the economic turnaround necessary to reposition Zimbabwe as a major productive center in the Southern African region. The Bank Group is currently engaged in a number of initiatives in the country. They include supporting the external debt and arrears clearance process, in addition to infrastructure rehabilitation in the Energy and Water and Sanitation sectors through the ZIMFUND. Other initiatives are: improvements of governance through the Governance and Institutional Support Programme (GISP), and indirectly supporting the private sector through regional financial institutions that operate and invest in the country.
This will be AfDB’s first non-sovereign intervention in Zimbabwe’s financial sector in recent years. It is a strategic milestone expected to provide greater comfort to other international lenders to offer additional support.