Afreximbank launches $100 million facility to improve liquidity in Zimbabwe

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The African Export-Import Bank (Afreximbank) has launched the Afreximbank Trade Debt-backed Securities (AFTRADES), a $100 million facility and associated instruments aimed at alleviating the liquidity challenges confronting the financial sector in Zimbabwe.

At a ceremony held as part of the meeting of the Board of Directors of the Bank in Harare on 22 March, Afreximbank President Jean-Louis Ekra said that AFTRADES had been designed largely as a collateral swap under which Afreximbank would lend its own name debt securities to participating banks against eligible collaterals.

“The Participating Banks will then use the debt instrument to pledge as security for inter-bank borrowings,” explained Mr. Ekra. “Since the debt instrument will carry the Afreximbank credit standing, all banks in the country should be comfortable to place funds taking the debt instrument as security”.

According to him, AFTRADES will add to the Bank’s activities in Zimbabwe, where it already has operating facilities amounting to $800 million, most of which are revolving.

In a statement at the launch, Patrick Chianamasa, Minister of Finance and Economic Development of Zimbabwe, expressed appreciation to Afreximbank for its continued support to the country, commending the Bank for being an all-whether friend by actively participating in the country’s economy when other financiers were on the fence.

“This facility, once implemented, will augment other policies and measures aimed at easing the liquidity challenges in the banking sector, and the economy as a whole, that the government is pursuing,” said Mr. Chinamasa.

Also speaking, Dr. Charity L. Dhliwayo, Acting Governor of the Zimbabwe Reserve Bank, said that the country was hopeful that AFTRADES would address the liquidity challenges facing the country by unlocking idle surplus funds at some banks and, thereby, resuscitate interbank trading.

She commended Afreximbank for its support to Zimbabwe, noting that it had so far committed more than $3.5 billion to Zimbabwean entities in the export and productive sectors, including agriculture, manufacturing, mining, financial services and mobile telephone industries.

The Government of Zimbabwe, through the Ministry of Finance and Economic Development, is serving as the guarantor and liquidity support contributor for Aftrades while the Reserve Bank of Zimbabwe will grant regulatory approvals to participating banks and provide the infrastructure required for the implementation and administration of the facility.