The African Export-Import Bank (Afreximbank) has extended US$80mn-worth of financing facilities to one of Zimbabwe’s major lenders, including help to overcome a lack of international banks willing to confirm letters of credit issued in the country.

CBZ Bank has secured a US$60mn credit line to be used to fund lending to corporates and SMEs, which Afreximbank says will “indirectly support export-oriented Zimbabwean businesses”.

Afreximbank says the credit line will also help local firms generate foreign exchange, easing pressure on supply of foreign currency, a perennial problem in Zimbabwe.

Through another US$20mn facility, Afreximbank will confirm letters of credit issued by CBZ Bank to overseas exporters to pay for imports to Zimbabwe, at a time when the bank says “such instruments are not readily available due to a shortage of confirming banks”.

“The programme will increase intra- and extra-African trade for Zimbabwe, through the importation of critical goods, such as fuel, pharmaceuticals and fertiliser, and support exports and imports of vital goods and services to Africa,” says Afreximbank executive vice-present Haytham El Maayergi.

“It will also enable CBZ to increase its trade activities and to expand its correspondent banking relationships.”

El Maayergi says the package will help “to bridge the financing gap” when “most international banks are limiting their exposure to Zimbabwean banks”.

Smangele Mandidi, an acting managing director at CBZ, says: “Our core focus remains on sourcing much-needed lines of credit to support the productive sectors of our economy and this will also go a long way in easing the liquidity challenges.”

The Afreximbank facilities “will be extended to support export growth through trade finance as well as capital expenditure financing”, she adds.

Support from international development finance institutions has been a lifeline for Zimbabwe, which has suffered from high inflation and chronic foreign currency shortages in recent years.

In May, the African Development Bank announced a US$15mn deal for Zimbabwe’s First Capital Bank which also included guarantees to international banks willing to confirm import letters of credit.

A group of commercial insurance providers in April established a trade credit insurance facility to mitigate non-payment risks for trade between Zimbabwe and South Africa.