Zim credit line due by New Year

MBONGENI MGUNI
Staff Writer | Tuesday November 23, 2010 00:00

 

The credit line will become available once the National Assembly approves an investment protection agreement and once a reciprocal action is done by the Zimbabweans.

Under the credit line, local banks will provide trade finance for local and Zimbabwean businesses, with government underwriting this through Botswana Export Credit Insurance (BECI).

BOCCIM and its Zimbabwean counterpart, the Confederation of Zimbabwe Industries (CZI) have already fine-tuned most aspects of the credit line, including interest rates applicable and lending thresholds.

According to the proposals, loans under the credit line will attract an interest rate of 10 percent per annum, while limits suggested are a minimum loan of US$500 and a maximum of US$5 million. It has also been proposed that the facility be a revolving fund, targeted at benefiting businesspeople on a continuous basis.

Last week, BOCCIM and CZI chiefs stepped up activities towards a formal deal meeting with various stakeholders including Trade and Industry Minister, Dorcas Makgato-Malesu. The Minister said the credit facility's finalisation was hinged upon the signing of Bilateral Investment Promotion and Protection Agreement (BIPPA) whose draft is due before the current Parliament for approval.

'We met with the Minister and she assured us that the credit line is available and that one of the last pieces to put it together - which is the investment protection agreement - should be going to Parliament soon,' said acting BOCCIM President, Thuli Johnson.

'She said we can expect the agreement to be approved this year so that we can move forward on the facility.

Acting Chairperson of the BOCCIM Task Force on the Credit Line, Alfred Dube said all indications were that the facility was on the cusp of being finalised.

'The Minister told us that focus at the moment is on the investment protection agreement which is very close to being signed. BECI, who government has appointed as the manager of this facility, are still in discussions with us at the banks on the guidelines of this facility which include loan limitations and interest rates and hopefully, by the New Year we will have made tremendous progress,' he said.

Stressing the near-finalisation of the credit line, BOCCIM Executive Director, Maria Machailo-Ellis said: 'Our best bet is that by December, the agreement will have gone through Cabinet and we will be able to roll out the facility.

'Our plan is that early January, we inform the public sector about what's concrete. We will actually hold meetings with the private sector about this.'

BOCCIM and CZI officials said draft guidelines had generally been agreed upon between the two sides.

'Our understanding is that in terms of tenure, the facility will be up to five years and the interest rates will not likely be more than ten percent per annum. Also, the understanding is that the facility should assist volumes of trade between the two countries and in joint ventures, there should be advantages to both Zimbabwe and Botswana,' said CZI President, Joseph Kanyekanye.

'There are many firms in Zimbabwe capable of delivering in terms of business, but these are troubled by finance. Joint ventures are gaining ground in Zimbabwe.'

Acting BOCCIM President Johnson urged local business people to utilise the credit line and forge trade links with Zimbabwe's resurgent economy.

'Let's use this P500 million that government has put together; many times we say government should create an enabling environment, but that's all they can do. We have to sign deals and push this cross-border trade.

'It will be unfortunate that when government has gone to this extent and when it's time to report back, we say no transactions have taken place or we are not as excited.'