Zimpapers Logo

Nqobile Bhebhe, Senior Business Reporter
FINANCIAL services group, NMB Zimbabwe, yesterday launched a $13.4 million European Investment Bank (EIB) facility to assist Bulawayo businesses that are involved in exports and expressed eagerness to scale up funding to capacitate their ventures.

The EIB extended the loan to NMB Bank recently as part of its private-sector lending initiative for Zimbabwe.

The loan facility, which has a tenure of seven years, will be available in United States dollars through the existing NMB branch network and will be in the form of short, medium or long term.

The bank said it is working on supporting the private sector including exporters in key areas of the economy with the right type of funding and the focus for this line is to fund agriculture, horticulture, and manufacturing exporting clients.

To unpack the facility to exporters, the bank partnered with ZimTrade to host a webinar to launch the facility to various stakeholders in Bulawayo and surrounding areas.

During the meeting, stakeholders were keen to know the amounts that could be loaned, interest rates charged, turnaround period for applications, collateral required and whether retooling projects are catered for.

In his presentation, NMB southern region manager, Mr Josiah Makombe, said the credit facility was meant to capacitate various exporters and is not restricted to current NMB Bank customers but open to exporters who want to scale up production as well as new companies that are export-orientated.

“The repayment period is up to seven years with a two-year grace period. Interest rate is pegged at up to 12 percent per annum with facilitation fees of two percent,” said Mr Makombe.

He said the facility is available for both working capital and capital expenditure initiatives and disbursements are done in US dollars or Euros.

The loan repayments will be from export proceeds.

On collateral, one participant, Mr Louis Herbst asked whether industrial equipment can be used to secure the loan facility.

In response, Mr Makombe said preference is on immovable assets but applications are assessed on the nature of projects undertaken.

“Over and above, there is additional security required. The loan is in US dollars and not RTGS, and purchased assets lose value by 25 percent on delivery,” he said.

Another issue raised was on turnaround time for credit facility applications as participants said in the past they felt “sidelined” after getting no feedback on applications made from outside Harare.

Mr Makombe said he would make sure that applicants from the region benefit, adding that the approval period ranges from four to six weeks.

“There is a credit committee in Harare that approves applications. But before we send applications, the receiving branch thoroughly goes through applications and conducts site visits to assess the viability of the business,” he said.

“We then attach recommendations, it is on the strength of the recommendations that the application is approved or not.

“As long as I am the head of the southern region it is my mandate to ensure business here benefits from the facility.”

A Bulawayo female entrepreneur, Ms Providence Moyo of Divine Pro Company, who has created a niche for herself through value addition of wild fruits to produce organic juices and skin care products, said her products are in demand in the market locally and abroad but she has no capacity to fully equip the factory.

Ms Moyo asked if the facility caters for equipping and upgrading of machinery?

Some entrepreneurs said they require funding to set up solar projects and retool factories that deal with packaging and cold rooms.

EIB is the long-term lending institution of the European Union owned by its member states.

It makes long-term finance available for sound investment in order to contribute towards EU policy goals.