Zimbabwe has secured a $250million line of credit facility from Gemcorp Group, a London-based investment group focused on emerging markets.
The five-year facility will enable the importation of essential and intermediate goods for Zimbabwe, Gemcorp said a statement released Monday.
Finance Minister Mthuli Ncube said the “granting of the facility by Gemcorp is a strong signal by foreign investors of their growing confidence in Zimbabwe. I expect more investors to follow suit”.
Atanas Bostandjiev, founder and CEO of Gemcorp Group, said: “With this facility, we are financing and coordinating the delivery of essential goods to help support the Zimbabwean economy. The trade finance gap in Africa remains significant and is an enduring constraint to economic development. The Gemcorp Group remains focused on working with local partners and borrowers across Africa and the rest of the emerging markets to provide creative funding solutions and foster trade and investment in the region”.
In May this year, Britain’s CDC broke the UK’s lending drought to Zimbabwe with a $100 million credit line to private companies, via Standard Chartered Bank.
Gripped by a liquidity crunch, Zimbabwe is desperate for lines of credit to fund essential imports. As foreign currency shortages worsen, the backlog for foreign payments has swelled to over $600 million. The crisis has stalled Zimbabwe’s efforts to revive industry and attract fresh foreign investment.
The closure of the tobacco trading season usually means that the foreign currency crisis will get deeper, and Reserve Bank of Zimbabwe John Mangudya conceded on Monday that this $250 million deal came just in time.
“(The credit line) is coming at an appropriate time to shore up foreign currency liquidity after the end of the tobacco selling season. This, together with other facilities that we have secured, should go a long way to meet the import requirements for essential products and services for the national economy,” said Mangudya, who first mentioned talks with Gemcorp in a briefing to Parliament in May.
Gemcorp’s Bostandjiev is a former partner at Goldman Sachs and also a former executive of VTB, the Russian investment bank that Zimbabwe has previously courted for financial support. Earlier this year, Gemcorp was part of a deal to raise $116million for Africell, the West African telecoms provider. Gemcorp also recently secured a $150million for power expansion in Angola.