Afreximbank bosses arrive for key talks

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    Dr Mangudya

    Africa Moyo
    Top executives of the African-Export Import Bank (Afreximbank) are expected in Zimbabwe today to meet Reserve Bank of Zimbabwe officials as efforts to tie up the $1,5 billion guarantee gather pace.

    It is understood that the Cairo-based Afreximbank team is coming to Harare to assess the country’s needs, before sealing the key guarantee that entails funding for the clearance of arrears to multilateral institutions.

    RBZ Governor Dr John Mangudya confirmed last week the coming of the Afreximbank team today.

    “. . . they (Afreximbank officials) are coming here by the 16th (of February) for a needs assessment,” said Dr Mangudya.

    A needs assessment can be defined as a systematic process for determining and addressing the needs or “gaps” between existing conditions and the aspired conditions or “wants”.

    Dr Mangudya said guarantees and liquidity support are critical as they help protect investor funds from country risk, and in the process, enhance investor confidence.

    In his 2018 Monetary Policy Statement, Dr Mangudya indicated that the RBZ is working with the Afreximbank to put in place a $1,5 billion facility that is earmarked for the provision of guarantees of up to $1 billion to investments coming into the country.

    The remainder is earmarked to provide liquidity support of up to $500 million.

    “Such guarantees and liquidity support are necessary to protect investors’ funds from country risk, and in doing so, enhancing investor confidence,” said Dr Mangudya.

    The Afreximbank pledged the $1,5 billion support to Zimbabwe on December 17 last year, after its delegation led by president Dr Okey Oramah met President Mnangagwa and Dr Mangudya.

    The move was then seen as a massive vote of confidence in the new administration.

    So far, Zimbabwe has benefited from various facilities of up to $1,1 billion.

    The Afreximbank established the $200 million and $300 million export incentive facilities, which are monetised by bond notes.

    The facilities were designed to make local exports competitive in a dollarised economy.

    Previously, local exports’ competitiveness on international markets was hampered by high costs of production, which resulted in consumers shunning Zimbabwean products.

    However, since the introduction of the facilities, Zimbabwe has grown its exports by 36 percent from $2,8 billion in 2016 to $3,8 billion last year.

    Exporters in the gold, tobacco and other sectors, have raked in $297 million in export incentives since their introduction in 2016.

    Dr Mangudya said Zimbabwe is also drawing down from the $600 million nostro stabilisation facility, which is aimed at meeting the country’s foreign payments requirements.

    “Whilst we are still drawing down from the existing facilities, we are working out to ensure that we get the $1,5 billion guarantee from the Afreximbank,” said Dr Mangudya.

    Sources say the $1,5 billion guarantee from Afreximbank could be sealed by end of the first quarter, all things being equal.

    The deal, coupled with the opening of tobacco auction floors, is expected to ensure that the country’s liquidity situation improves going forward.

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