05/17/2018 | Press release | Distributed by Public on 05/16/2018 12:17
- Largest investment in the country's private sector in years will create jobs and support the people of Zimbabwe -
CDC Group plc ('CDC'), the UK's development finance institution, and Standard Chartered Bank ('Standard Chartered') have today announced an investment facility that will lend up to US$100 million to growing businesses in Zimbabwe.
The risk-sharing agreement provides much needed foreign currency capital for local businesses, allowing them to grow, create jobs and improve the country's economic future.
The agreement comes at a time when the Zimbabwean private sector faces a critical shortage of foreign currency for import of raw materials and other essentials after many years of economic decline. Local banks are unable to provide the capital needed by the mainstays of the Zimbabwean economy such as agribusiness and manufacturing, which are vital to the country's economic growth and foreign currency generation from export markets.
The five-year facility will see CDC and Standard Chartered share the default risk on up to US$100 million of new loans originated by Standard Chartered Bank Zimbabwe in the southern African state.
The investment will be used for capital expenditure and for helping businesses meet their day-to-day financing needs. The likely recipients will include firms in the food processing, manufacturing and agriculture sectors.
Welcoming the investment, CDC's Chief Executive, Nick O'Donohoe said:
'Zimbabwe's economy has been shattered over the last two decades, yet holds real potential for future growth. CDC is taking a lead within the investment community in showing its support for economic development. If a new government in post-election Zimbabwe encourages investment and pro-business policies, Zimbabwe can be one of the great investment success stories of the next decade. What the country needs is patient capital, and it needs it now.
'Our agreement with Standard Chartered will enable them to provide vital foreign currency lending to some of Zimbabwe's most dynamic businesses, creating jobs and opportunity. Our support will not only enable local companies to access finance in hard currency, but will demonstrate to commercial investors that the economic environment is ready for further financing.'
Commenting on the agreement, Sunil Kaushal, Regional CEO, Standard Chartered Bank said:
'We are delighted to partner CDC in providing access to finance in a responsible way; enabling people, businesses and communities in Africa to progress and prosper. This partnership builds on the success of our risk participation partnership in Sierra Leone and is a unique example of how sharing commercial risks with development partners helps deploy further capital into the continent, supporting the Sustainable Development Goals (SDGs). We have been in Zimbabwe for over 120 years and through this agreement we reinforce our confidence and commitment to the country's long term economic growth.'
Zimbabwe has suffered through a 20-year economic crisis, which has resulted in an acute economic downturn and hyper-inflation that wiped out the Zimbabwean Dollar. Lending activities have been severely hampered in the country, and even more constrained given persistent currency shortages and limited external funding lines to banks.
Standard Chartered Bank Zimbabwe is a wholly-owned subsidiary of Standard Chartered Bank Plc. It is the oldest banking institution in Zimbabwe.
In 2013, CDC backed Takura, a local Zimbabwean investment fund with a US$23m commitment, which has been used to support SMEs, particularly in the food and agri-processing sectors.