THE country’s biggest bank by capitalisation, CBZ, has secured over US$160 million in lines of credit from four top continental financiers including the Trade and Development Bank (formerly the Preferential Trade Area (PTA) bank), which are earmarked for low cost housing projects and small and medium enterprises (SMEs).
The Burundi-based Trade and Development Bank provided US$104,5 million while US$35 million came from the African Export-Import Bank (Afreximbank).
CBZ also got US$15,8 million from a pan-African finance institution based in Nairobi, Kenya, Shelter Afrique which was founded in 1982 to exclusively support the development of the African real estate and housing sector.
The Arab Bank for Economic Development in Africa (BADEA), which is based in Khartoum, Sudan availed US$5 million. Of the total lines of credit, US$36 million is earmarked for SMEs, as CBZ is increasingly focusing on informal businesses in order to tap the inherent potential in the sector.
The funds are long-term in nature, solving almost a decade long challenge that has gripped the country and crippled the manufacturing, mining and agriculture sectors which rely on long-term financing.
Most local financiers have largely been preferring to extend short-term loans mainly for 30 days at interest rates of between 15 percent and 18 percent.
CBZ chief executive officer Mr Never Nyemudzo told The Sunday Mail Business that the bank has accessed the US$160,3 million lines of credit and pledged to continue lending offshore funds as their interest rates are relatively lower than local credit.
However, Mr Nyemudzo said the recent capping of interest rates at 12 percent by the Reserve Bank of Zimbabwe was a cause for concern as that has a direct impact on margins, which might discourage the bank from actively looking for additional funds going forward.
“We do have a number of foreign lines of credit from PTA Bank (now Trade and Development Bank and the) Afreximbank but we haven’t been aggressively looking for new lines of credit because of the new dynamics of lending rates . . .
“Interest rates in Zimbabwe are softening so you need to time your lines of credit appropriately and it’s always the norm that when interest rates have gone down to around 9 percent from international creditors, then you start looking for new lines of credit otherwise you may get them higher when you need to lend lower.
“We have US$160,3 million long-tenure lines of credit from Shelter Afrique for all low-cost housing loans; we also have general lines of credit from Afreximbank for all current projects including the SMEs and from PTA bank, to ease liquidity crunch,” said Mr Nyemudzo.
CBZ has become the country’s biggest lender to various sectors of the economy since 2009.
The bank has an overall loan book of US$1 billion, which equates to 30 percent of the industry loans and advances. Its major catch has been the interest rate which pegged at an average of 12 percent. When lending to the Zimbabwe Agricultural Development Trust (ZADT) and long-term clients, its interest rate is 4,5 percent and six percent, respectively.
This year, CBZ has lined up a number of projects and expects to shell out more than US$75 million for housing projects in Bulawayo, Marondera and Harare.
The Victoria Falls housing project – consummated at the cost of US$12 million – has already taken off and is targeting close to 1174 residential stands as part of efforts to complement Government efforts of providing houses to low-income earners.
The national housing backlog is estimated at more than 1,25 million. – Sunday Mail