Afreximbank, Zimbabwe's lender of last resort

Published: 28 September 2017

THE African Export Import Bank (Afreximbank) has emerged as Zimbabwe's key source of financial succour since the early 2000s, when President Robert Mugabe's government was frozen out of international capital markets due to arrears and a fall-out over rights abuses and economic policies.

Last week, Afreximbank president Benedict Oramah visited Zimbabwe and signed an agreement for a $600 million nostro stabilisation facility, meant to ameliorate the southern African country's foreign payments problems. During his visit, Oramah also announced plans to set up a regional Afreximbank head office in Harare, on 1,2 hectares donated by President Robert Mugabe's government.

Finance Minister Patrick Chinamasa also revealed that Afreximbank, which has several facilities exceeding $1 billion already running in Zimbabwe, is leading efforts to raise $1,8 billion for the clearance of Harare's arrears with the World Bank and African Development Bank. The Cairo-based Afreximbank focuses on boosting trade within Africa.

Below is the bank's history and projects in Zimbabwe:

- Afreximbank was established in Abuja, Nigeria in October, 1993 by African Governments, African private and institutional investors as well as non-African financial institutions and private investors for the purpose of financing, promoting and expanding intra-African and extra-African trade.

- The Bank was established under the twin constitutive instruments of an Agreement signed by member States and multilateral organisations, and which confers on the Bank the status of an international multilateral organisation; as well as a Charter, governing its corporate structure and operations, signed by all Shareholders.

- The authorised share capital of the bank is Five Billion United States Dollars (US$5 billion). It has assets worth about $12,5 billion, with nearly $11 billion of that being loans.

- The bank, headquartered in Cairo, the capital of the Arab Republic of Egypt, commenced operations on 30 September, 1994, following the signing of a Headquarters Agreement with the host Government in August, 1994.

- Afreximbank has branch offices in Harare, Abuja, Abidjan and Nairobi.

- Zimbabwe was one of Afreximbank's founding members and, through the Reserve Bank of Zimbabwe, is the bank's third largest sovereign shareholder, after Nigeria and Egypt.

- The first Branch Office of Afreximbank was established in Zimbabwe in 1996, with the current RBZ governor, John Mangudya, being the first branch manager of the Harare office.

- Some of the running Afreximbank facilities in Zimbabwe include:

- $200 million Aftrades facility to support inter-bank borrowings and improve liquidity;

- $200 million future flows export facility;

- $150 million gold backed facility;

- $150 million ZESA facility;

- $70 million grain import facility; and

- Over $150 million worth of facilities extended to various sectors of the economy, including the key tobacco and tourism sectors.

- The RBZ is currently working on new facilities with Afreximbank, namely:

- $600 million Nostro Stabilisation Facility to meet the forex requirements for productive foreign payments; and

- $150 million letters of credit facility to support the importation of fuel, fertilisers and feedstock for the manufacture of cooking oil. Afreximbank is the lead arranger in efforts to secure funding for the repayment of Zimbabwe's arrears of $1,8 billion to the World Bank and AfDB. The arrears clearance is essential to Zimbabwe's bid to access fresh foreign capital and to reduce its country risk.

- fingaz