FBC BANK has secured a new US$10 million line of credit from a US bank with view of supporting local industry, the group chief executive, Mr John Mushayavanhu, has said.
The line of credit will be extended over a 10-year tenure and carries an interest rate of 7 percent per annum. This is one of the longest lines of credit obtained by a local bank since dollarisation in 2009.
“That is the kind of money we need and we are expecting disbursements early in the new year,” said Mr Mushayavanhu.
Lack of long-term loans caused by transitory deposits has made it difficult for industry to obtain long-term credit for retooling and working capital.
With Zimbabwe’s debt nearing US$11 billion, this has raised the country’s risk profile and made it difficult for companies to source offshore finance. As such, local banks have been finding it hard to mobilise long-term lines of credit due to the country’s perceived high risk profile. This, in turn, resulted in banks charging high interest rates.
“In (participating in) our small way, we will make a difference. We need to recapacitate our manufacturing sector. It has outdated machinery and the short nature of lines of credit local banks are obtaining are not good enough to boost capacity,” he said.
The lines of credit that most banks are getting range between one and two years. This has made the cost of borrowing credit expensive, despite the ever growing appetite for credit.
Early this year, FBCH obtained a US$40 million line of credit from the Africa Export-Import Bank. The bank also secured another US$5 million from its US- based shareholders. This year, two US-based companies bought close to 12 percent shareholding in FBC Holdings in separate transactions.
Consilium Investment Management bought about 4 percent of the banking group’s total issued share capital while a Mauritian-based private equity firm ShoreCap II Limited through its United States-based fund managers Equator Capital Planners, acquired an 8 percent shareholding.