SMEs to Enjoy Trade Finance Credit Line in Zimbabwe

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Small and medium enterprises (SMEs) in Zimbabwe are set to receive a significant boost through a newly approved trade finance credit line from the African Development Bank (AfDB). The $15 million funding deal is designed to support SMEs and women-owned businesses in Zimbabwe, helping to close the country’s trade finance gap.

The package, provided to Zimbabwe’s First Capital Bank, includes a $7.5 million direct line of credit and an additional $7.5 million facility for guarantees to overseas confirming banks, covering non-payment risk on trade finance transactions. This initiative aims to provide the essential hard currency financing that First Capital Bank needs to expand its trade finance support for SMEs and local corporations.

Zimbabwe has long struggled with foreign currency shortages, with the population primarily using US dollars after a series of failed sovereign currencies over the past two decades. This new financing arrangement is expected to mitigate some of these challenges by providing the much-needed liquidity for trade activities.

The global trade finance gap, estimated at $2.5 trillion, is particularly acute in Sub-Saharan Africa, where SMEs often face difficulties accessing trade finance from banks. Development finance institutions like the AfDB are crucial in bridging this gap, enabling commercial lenders to extend finance to smaller companies.

According to the AfDB, the approved package will help stimulate Zimbabwe’s inter-African trade and is projected to catalyse approximately $146 million in trade over the next three years. Moono Mupotola, the AfDB’s Zimbabwe country manager, emphasised that the facility will support the importation of strategic commodities and enhance the integration of Zimbabwe’s economy into regional and global trade markets, which are essential for the country’s growth.

Tapera Mushoriwa, CEO of First Capital Zimbabwe, expressed optimism about the impact of the funding: “The package aims to bolster our trade finance services in Zimbabwe, across Africa, and globally.”

First Capital Bank, formerly known as Barclays Bank until its acquisition by the Mauritius-headquartered First Capital group in 2017, operates commercial banks in several southern African countries. This new trade finance credit line from the AfDB is expected to significantly enhance its capacity to support the local economy and drive growth for SMEs and women-owned enterprises in Zimbabwe.