Zim to get $1.5bn package to boost foreign investment | Fin24

Zim to get $1.5bn package to boost foreign investment

Feb 08 2018 13:51
Crecey Kuyedzwa

Harare - Zimbabwe is set to receive investment guarantees worth $1.5bn as the country works on boosting investor confidence after being starved of foreign direct investment for more than two decades.

According to the Reserve Bank of Zimbabwe (RBZ), the African Export-Import Bank (Afreximbank) has promised a financial package to guarantee foreign investment into the Zimbabwean economy. 

In his 2018 monetary policy statement on Wednesday, RBZ governor John Mangudya said the Zimbabwean central bank is “working with the African Export-Import Bank (Afreximbank) to put in place a $1.5bn facility that is earmarked for the provision of guarantees".

Of the amount, $1bn will go towards the guarantees while the balance of $500m will go towards liquidity support. 

Mangudya said such guarantees and liquidity support are necessary to protect investor funds from country risk and enhance investor confidence.

As part of the confidence-boosting measures, the RBZ also ringfenced foreign portfolio investment on the Zimbabwe Stock Exchange (ZSE).

Foreign investors on the bourse have been struggling to repatriate both principal capital and capital gains, with some resorting to buying Old Mutual Plc shares for onward sale on the JSE and the London Stock Exchange.

The RBZ will make sure that all foreign investment inflows on the ZSE will be used to repatriate sale proceeds by foreign investors, with first priority being given to principal investments. Repatriation of capital gains as well as dividends will be done as a second priority.

“This policy measure is necessary to augment the current $5m that has been provided in the fund as seed capital and to further provide assurances to investors that Zimbabwe is open for business,” said Mangudya.

This is not the first time that the Afreximbank has provided funding relief to Zimbabwe. The Africa-orientated bank provided more than $1.1bn as nostro stabilisation facilities sought to bring equilibrium to the foreign exchange market. 

The funds were used to pay for critical imports such as fuel, electricity and raw materials among other requirements. Zimbabwe is facing a critical shortage of foreign currency and has turned to the Afreximbank to avert major crisis. 

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