Executives from the European Investment Bank (EIB) will visitthe Zimbabwe in the second half of the year to do a due diligence exercise, as they eye an investment in the financial services sector, an EU envoy has said.
BY VICTORIA MTOMBA
The EIB was expected to invest in the financial services sector in the first quarter of this year, but the plan has been hindered by technical issues, EU Ambassador to Zimbabwe Phillippe van Damme said on Tuesday.
Van Damme said the first agreement of the principles has been submitted to the EIB board, although Zimbabwe owes the European institution $300 million.
“Technical issues have taken longer, it is not a substantive delay. Once we have the agreement in principle, EIB will come back to do due diligence with the financial sector. The idea was to come during the first half of this year. But we may have a little bit of delay due to internal issues of preparing funds,” he said.
Van Damme said the first agreement should be complete by the first quarter within the first three months of the year and then move to due diligence. He said identification of possible partners will be done by the end of the first quarter.
The bank will provide long term capital to the economy, which country needs. The financial services sector has been facing various challenges including non performing loans, low liquidity in the economy and depressed economic activity.
In 2014, a delegation from EIB visited Zimbabwe and held discussions with Treasury on clearing arrears. The delegation also met business representatives.
The EIB in the past worked with Zimbabwe in 30 different operations that included power and water provision.
The EIB has in the past approved €1,5 billion for over 25 projects. Van Damme said the EU has committed €10 million under the Zimbabwe Reconstruction Fund earmarked for public financial management, ease of doing business and water reticulation systems.
Van Damme said the EU and World Bank signed an agreement in December for the fund. The Zimbabwe Reconstruction Fund is set to be $100 million to help the country and it is managed by the World Bank.
EU, United Kingdom, Sweden, Germany, Norway, World Bank State and the Peace Building Fund are contributors to the fund. As of the third quarter last year almost $50 million was raised for the fund and the programme runs until 2019. The fund was launched in 2014 to strengthen Zimbabwe’s reconstruction and development with a focus on stabilisation, reform and poverty alleviation.