IDBZ awaits $40 million infrastructure drawdown

THE Infrastructure Development Bank of Zimbabwe (IDBZ) is awaiting drawdown on two lines of credit amounting to $40 million as the institution mobilises resources for infrastructure projects.

CHIEF BUSINESS REPORTER

The move comes after the bank was removed from United States sanctions last year, enabling it to seek offshore lines of credit.

IDBZ chief executive officer Charles Chikura said the money would be released once the bank “has satisfied the requisite conditions precedent”.

“The resource, which has a long-term maturity, will be channelled to key productive sectors of the economy to meet their capital expenditure requirements,” he said.

Chikura said the bank was in negotiations with other regional development finance institutions which were at different levels of consummation.

“This strategy is critical in view of the current liquidity challenges the country is experiencing which has brought to the fore the limit to which Zimbabwe’s developmental needs can be funded from the domestic capital markets,” he said.

The bank’s push to raise lines of credit is predicated on adequate levels of capitalisation.

The bank is weakened by a $39,8 million legacy debt which has weakened its balance sheet.

Government is considering a proposal to hive-off a $39,8 million legacy debt from the IDBZ’s balance sheet to give the institution room to mobilise  resources for infrastructure  development.

The weak capital base has made it difficult for the bank to mobilise lines of credit offshore.

The group has identified and appraised a number of infrastructure-related projects it intends to finance through bonds issues in 2014.

IDBZ plans to issue $100 million worth of bonds.

The new bonds will ride on the success of IDBZ’s maiden
$30 million infrastructure bond issued in 2012.

In its election manifesto, Zanu PF said it would capitalise IDBZ to the tune of $5 billion to raise more money from local and international capital markets.

“With a capital base of at least $5 billion, the bank will be able to raise liquid capital from the domestic and international markets of up to four times its capital base [$20 billion], over a five-year period,” it said.

It said IDBZ’s ability to underwrite business and to borrow on the local and international markets has been very limited in contrast to successful development banks such as South Africa’s Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation.

The two South African institutions have the same-bank model as IDBZ, but are well-capitalised and self-financing, thus allowing the institutions to effectively deliver on their strategic mandates.

“DBSA, for instance, is capitalised to the tune of $1,8 billion and is therefore able to play a significant role in the financing of South Africa’s infrastructure projects,” Zanu PF said.

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