Zimbabwe and Botswana at the weekend concluded a $70 million line of credit deal, one of the five facilities pledged by Sadc countries in support of its economic reconstruction, when the country formed a unity government last year.
Finance minister Tendai Biti last week led a delegation of local businesspeople to Botswana to seal the deal.
The Botswana Confederation of Commerce, Industry and Manpower took advantage of the occasion to press for speedy finalisation of the Bilateral Investment Promotion and Protection Agreement (Bippa)between the two neighbours.
The line of credit will be offered at Libor+5% (0,5% + 5%) and is expected disbursement in the next four weeks after disbursement modalities have been finalised between the two governments.
Libor is an acronym for London Interbank Offered Rate – the interest rate that banks charge each other for loans, usually in Eurodollars.
Confederation of Zimbabwe Industries (CZI) president Joseph Kanyekanye, who was part of the delegation, yesterday told NewsDay that parties to the deal agreed to have the 500 million pula or US$70 million credit line packaged as a revolving facility.
“This is what the country is looking for. Given the liquidity challenges that we have been facing this should go a long-way in injecting life into the economy,” said Kanyekanye. “It is also critical that government heeds the call of our business partners in Botswana to have a Bippa in place to cement our economic ties.”
The deal comes just under two weeks after the Africa Export Import Bank (Afreximbank) and the Zimbabwean government launched a low-interest rate $100 million joint loan facility with an initial drawdown of $70 million, to revive the country’s economy.
Afreximbank will contribute US$50 million, while the government will chip in with US$20 million to the fund, which will be channelled through banks.
Botswana and Zimbabwe agreed that the $70 million facility would cover the export of goods and services and joint venture deals between the two countries.
They also agreed that 70% of the funds would go towards manufacturing with the rest being committed to other sectors.
Kanyekanye said the work on the Bippa had been going for a long time and there was no reason why it should not be concluded.