The European Union (EU) has facilitated over US$100 million in low-interest loans to four major local banks, in a move aimed at stimulating investment in agriculture, the food industry and renewable energy, EU Ambassador to Zimbabwe Jobst Von Kirchmann has said.
Speaking during a panel discussion at the EU-Zimbabwe Business Forum in Harare, Von Kirchmann said the initiative is more than just about injecting money into the economy, it’s about enabling access to sustainable, long-term capital.
“It’s not only about getting the money, but how do you get it? Actually, you need a bankable project. You need to be able to present your project in a certain way. That’s why we have also put in technical assistance,” Von Kirchmann said.
The financing, channeled through the European Investment Bank (EIB), will benefit four financial institutions namely NMB Bank, First Capital Bank and Stanbic Bank.
These banks, Von Kirchmann said are expected to pass on the benefits of the low-interest, long-tenure loans to local businesses and entrepreneurs.
“So, we have signed over US$100 million with NMB (US$39 million), FCB (US$14 million), Cabs (US$17 million) and Stanbic (US$28 million). The European Investment Bank gave a loan to these banks, which has a low interest rate and a tenure of up to seven years and the banks can then use this tenure,” Von Kirchmann explained.
He said the extended loan terms will significantly improve access to long-term capital in a market where lending windows are often limited to a few years at best.
“Most of the banks actually have started using it with even a lower one. As Gerald from NMB was saying, there is no long-term lending available. So even if you get three years, it’s already great, and if you think about it now, if the EIB gives a seven-year loan, it means you can use it twice,” he said.
Von Kirchmann explained that the loans are not grants but are tied to specific sectors with the potential to drive inclusive and sustainable economic growth.
“So, it’s not entirely free loans, but it’s linked to agriculture, the food industry, and renewable energy, and then cross-cutting issues,” he said.
The inaugural EU-Zimbabwe Business Forum is part of ongoing efforts to improve trade and investment ties between Zimbabwe and the European Union.
Also speaking at the forum, Reserve Bank of Zimbabwe (RBZ) deputy governor Innocent Matshe called for a shift in the business mindset, urging economic actors to embrace confidence and resilience.
“As economic agents, we need to understand that you cannot succeed in business if you are always expecting that you will fail. Let’s build upon the success that we have been expecting to be positive,” Matshe said.
He said the central bank remains focused on ensuring macroeconomic stability, especially around the exchange rate and currency reforms.
“The Reserve Bank has been committed to ensuring stability, and that anchors everything else because that anchors your exchange rate stability. The obtaining exchange rate stability will be sustained through the medium term, supported by strong liquidity and money supply management and increased inflow of foreign currency,” he said.
Matshe added “We are trying to foster confidence and trust locally and internationally to create an environment where currency is not an issue of interest, but in doing so, we would like to build a system that everyone can trust.”
