EU bank extends US$18m loan to CABS

The Herald

Golden SibandaSenior Reporter 

CABS has secured €15 million (about US$18,15 million) in long term finance from the European Investment Bank (EIB) to help local firms recover from the negative impact of Covid-19. 

The historic funding agreement, which could potentially open more avenues for additional support from EIB for Zimbabwe, is the first such commercial facility by EIB to a local bank. 

It is part of EIB’s increased engagement across Africa to ensure companies access more loans when faced with unprecedented health, business and trade challenges linked to Covid-19.  

Notably, this is the EIB’s first investment in Zimbabwe in 22 years. 

The EIB financed energy, water, telecoms and industrial investment in Zimbabwe between 1982 and 1999 and its comeback is a positive development, at a time the Second Republic has embarked upon an engagement and reengagement drive. 

The EIB is the world’s largest international public bank, owned by its member states. 

Last year, EIB provided €4,7 billion for private sector investment across Africa. 

CABS and the EIB, said in a joint statement that the loans will allow the former to provide Covid-19 recovery and longer US dollar loan tenures to business operators in Zimbabwe. 

The private sector financing will help businesses most impacted by Covid-19 and forms part of EIB’s rapid response across Africa to strengthen resilience to the pandemic. 

The package was announced at a virtual ceremony in Harare attended by CABS managing director Mr Mehluli Mpofu, EIB vice president Thomas Östros, EU Ambassador to Zimbabwe Timo Olkkonen and EIB new regional representative for Southern Africa Mr Jim Hodges. 

Mr Mpofu said companies and communities around Zimbabwe have been impacted by the pandemic and that CABS the banking unit of financial services behemoth Old Mutual Zimbabwe was committed to supporting the private sector. 

He said CABS was keen to support private sector investment as well as enable corporate, business and agricultural clients to invest for the future to create economic opportunities.  

“The new €15 million European Investment Bank backing for CABS will unlock new private sector financing to be provided by our branches across the country to private businesses. 

“The close cooperation between CABS and the EIB financial experts over recent months will transform access to longer term loans in foreign currency essential for Zimbabwean businesses to grow during the challenging (Covid-19) times,” said Mr Mpofu. 

He added that the funding will ensure Zimbabwe benefits from EIB’s rapid response to strengthen economic resilience of the economy and businesses to the pandemic. 

Mr Östros said the financing will ensure access to funds by Zimbabwean entrepreneurs and businesses, essential to overcome business uncertainties and challenges brought by the Covid-19 pandemic. 

“As part of team Europe, the European Investment Bank is pleased to announce a €15 million of new targeted financing to CABS with the aim to provide liquidity to sustain jobs amid the pandemic and to strengthen private sector investment and create jobs in the post pandemic recover of Zimbabwe,” said Mr Östros. 

He said the arrangement with CABS demonstrated how Team Europe and its African partners have joined forces to beat the challenges presented by Covid-19. 

Mr Östros added that Team Europe was committed to supporting private sector investment in Zimbabwe and the cooperation between EIB and CABS would increase access to targeted business finance by companies across Zimbabwe.  

Mr Olkkonen reiterated Team Europe’s commitment to support private sector investment in Zimbabwe by helping to build private sector resilience to Covid-19.

The financing will create jobs, unlock business growth and alleviate poverty.

The Herald