A year later, CDC’s US$100m credit lifeline for Zimbabwe lies idle

CDC CEO, Nick O'Donohoe

It’s a paradox that reflects how complex Zimbabwe’s problems are; the country is desperate for foreign currency, but it cannot access the foreign currency that it needs, because it has no foreign currency.

Months after the CDC Group, the UK’s development finance arm, announced a US$100 million credit package to Zimbabwean companies, the funds still lie unused over fears that forex shortages may cause default.

Only one company has qualified for the funds, but the money is yet to be released, Britain’s foreign secretary Harriet Baldwin told a briefing of the International Development Committee, which monitors the UK’s development programmes for the British parliament.

“The challenge has been so great that with that particular programme, that was announced independent of the UK government, there has been one viable company that has been able to come forward with a reasonable application that has not yet actually been disbursed,” Baldwin said, when asked about progress on the CDC funds.

The fate of the CDC loan shows how tough it will remain for Zimbabwean firms to access foreign credit as long as there is no solution on the distorted exchange rate, and while the forex shortages continue. With no certainty on the exchange rate, lenders are unsure about how companies will pay back loans.

Baldwin said: “So, nothing from what could potentially be a great source of funding for the private sector in Zimbabwe has been viable given the difficult situation regarding companies earning foreign exchange and the different exchange rates operating in the economy.”

CDC will however extend a new US$25 million into Takura Capital, the equity fund through which CDC is invested in Zimbabwean companies such as Cairns and Lobels. Takura Capital also invests in the region, and last year acquired Mozambican vegetable producer Vanduzi from a British company.

“They (CDC) have been more successful” with the “patient capital” model of private equity as opposed to offering credit, Baldwin said.

According to Baldwin’s testimony, CDC appears to be concerned by the ability of beneficiary companies to generate the foreign currency that would be needed to service the loans. She did not name the single company that has been approved for the funding.

The CDC facility in May last year was the first such deal from any UK lender to Zimbabwe since 1994, and was seen at the time as a sign of thawing commercial relations between the UK and Zimbabwe. It was also one of the rewards President Emmerson Mnangagwa’s government got for its effort to attract international capital.

Under the five-year facility, CDC and Standard Chartered share the default risk on up to US$100 million of new loans originated by the bank. The loans would go only to selected private firms.

CDC has over $5 billion in investments around the world, and in December the company made a US$180 million equity investment into Strive Masiyiwa’s Liquid Telecom. Last year, CDC CEO Nick O’Donohoe announced that CDC would invest up to US$4.5 billion into African businesses over the four years to 2021. It is currently invested in over 700 African firms.

CDC CEO, Nick O’Donohoe, speaking with Zimbabwean businesspeople in Harare, January 2018

CDC in Zimbabwe

Through equity, CDC has over recent years helped revive key Zimbabwean industries.

Cairns Foods, one of Zimbabwe’s biggest food manufacturers, went insolvent in 2013. Its brands, such as Sun Jam, Chompkins, Cashel Valley and Thingz, disappeared from store shelves.  

Through Takura, Cairns received up to $30 million in equity finance, and this saw its capacity utilisation rising to 70% by 2018, boosted by a new Cashel Valley baked beans plant, which created 200 new jobs. Brands such as Spuds and Chip Stix returned to market.

By 2016, production at Cairns had increased by 700%. Cairns revived its outgrower scheme in Chimanimani, securing a ready market for local farmers.

Cairns began reviving its Harare and Mutare plants, and working on its pasta manufacturing plant in Bulawayo.


In 2011, one of the country’s oldest bakeries, Lobels, shut down under the weight of bank debts.  Five local banks — FBC Bank, CBZ Bank, NMB Bank, Metbank and Capital Bank — took up equity for the $14 million they were owed.

After an investment from CDC, the banks exited the company, and Lobels expanded even further. A new line was opened in Bulawayo and the company, just coming out of collapse, was confident enough to buy another company, Kwekwe’s Plaza Bakery, and open new retail channels.