zB Financial Holdings is seeking $35 million lines of credit to revive its nostro accounts and also to fund local energy projects, chief executive Ronald Mutandagayi has said. Mr Mutandagayi told Business Weekly that $20 million will be used to support the bank’s nostro accounts while the balance is meant for a loan facility — which is still being negotiated — to the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).
“The bank has made two lines of credit applications to two foreign banks in an effort to help make foreign payments and tackle liquidity challenges in the economy,” the ZB executive said, adding “the bank has already agreed on a $20 million loan facility with a regional correspondent bank to service the local market, which has been dry for the past 17 months or so.”
“The money will also help to smooth out the vagaries of variable expenses and to finance projects where it will be difficult to ascertain the amount of funds needed in advance.
“We are also in the process of acquiring a $15 million ZETDC loan from an African corresponding bank which we think will be ready before the year ends,” said Mr Mutandagayi.
Boosting exporter’s nostro account funding would enable the bank to support international transactions and comes after the financial institution was removed from the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC)’s sanctions list.
ZB, which had been on sanctions for nine years, is currently on an aggressive exercise to attract foreign lenders.
Mr Mutandagayi said the bank was riding on the new leadership’s efforts to re-engage the international community to get lines of credit and ease foreign currency shortages.
“We are optimistic that the new dispensation may restore investors’ and international money lenders’ confidence as most of them are watching closely to see how the democratic process unfolds.
“And certainly if we are quick to do what’s needed, we can easily access some funds from foreign banks.
“As we speak we are applying for various loans outside the country and we believe that with the new developments we can be able to access loans soon,” said Mr Mutandagayi.
The activation of foreign accounts will allow the bank to import cash.
ZB has prepared to roll out a diaspora business strategy in targeting markets in foreign lands.
The financial institution has also started re-establishing relations with money transfer agencies like Western Union and Mukuru to enable people in the diaspora to remit their funds.
A diaspora business strategy has been prepared and is expected to be rolled out in the near future targeting markets in Australia, the United Kingdom, Canada and the United States.
Currently, ZB is not offering extra incentives for the diaspora community to boost their nostro account funds but intends to do so when it has complied with all international banking practices. ZB highlighted that investment was committed to strengthen risk and compliance areas to standards that are commensurate with international banking business practices.
The financial institution has made substantial progress towards the reintroduction of the VISA Card with the launch expected anytime from this month.
The launch of international money transfer operations with various partners is expected to start before year end.
Zimbabwe’s constrained access to international financing has been worsened by the fact that the country has lost at least 50 foreign correspondent banks since 2008.
It is believed that Zimbabwe has only three banks throughout the world that are able to finance the country, but with the optimism in the market more foreign correspondent banks are expected to reopen soon.