Britain has extended a 100 million U.S. dollars loan to Zimbabwe’s private sector, the first direct commercial loan to the southern African country in over two decades, the state-controlled Herald newspaper reported Thursday.
The loan will be for up to three years and can be used for capital expenditure or working capital. It is believed that companies in food processing, manufacturing, and agricultural sectors are likely to benefit.
Reserve Bank of Zimbabwe Governor John Mangudya said the loan facility was a sign of confidence by the international community in Zimbabwe following the advent of a new administration led by President Emmerson Mnangagwa.
“It is a seal of approval or endorsement of government polices and measures aimed at transforming the economy into a middle income by 2030. From the RBZ side, we are pleased by this facility because it will increase exports by Zimbabwean companies,” he said.
CDC chief executive Nick O’Donohoe said they started preparing the loan facility as soon as former President Robert Mugabe left office.
Mugabe resigned in November last year after a military intervention, ending his uninterrupted 37 years in power.
“We think it’s pretty significant. Zimbabwe’s economy has been shattered over the last two decades, yet holds real potential,” O’Donohoe said.
He said the last direct CDC loan to Zimbabwe was to a fish farm in 1994.
UK’s development finance institution, CDC, will share the default risk on loans to provide foreign exchange to Zimbabwean companies.
