British fund Gemcorp extends $250 million loan to Zimbabwe – CEO
Harare, September 18, 2018,(AltAfrica) – London-based emerging market fund Gemcorp Group said on Monday it had extended a $250 million loan to Zimbabwe to help the country import essential goods like fuel and medicine, the company’s CEO said.
The southern African nation is facing its worst shortages of cash dollars since it dumped its own currency in 2009 in favour of the U.S. currency. This has made it difficult for companies, including mines, to pay for imports.
Zimbabwe’s backlog for foreign payments is more than $600 million, according to the central bank.
Gemcorp was formed in 2014 by Atanas Bostandjiev, a former executive of Russian investment bank VTB Capital, part of banking group VTB.
“With this facility, we are financing and coordinating the delivery of essential goods to help support the Zimbabwean economy,” Bostandjiev said in a statement.
Zimbabwe’s new Finance Minister Mthuli Ncube said the loan was a show of confidence in an economy buffeted by a serious liquidity crisis and unemployment above 80 percent.
The former British colony became a pariah under Robert Mugabe’s nearly four-decade authoritarian rule after it began to default on loans from foreign lenders like the International Monetary Fund and World Bank.
Mugabe was forced to resign after a coup in November, paving the way for Emmerson Mnangagwa, who went on to be elected president in a disputed vote held on July 30.
Without loans from global lenders, Zimbabwe has struggled to attract credit lines and external investment required to reboot its economy.
In May this year, Britain’s development finance institution CDC became the first British company to extend a direct commercial loan to Zimbabwe in more than two decades, making made available a $100 million facility to private firms through Standard Chartered Bank.
“The granting of the facility by Gemcorp is a strong signal by foreign investors of their growing confidence in Zimbabwe. I expect more investors to follow suit,” Ncube said in a statement.
Ncube last week said he would accelerate plans to pay $1.8 billion arrears to the World Bank and the African Development Bank to rebuild investor confidence.