THE Infrastructure Development Bank of Zimbabwe has secured a US$10 million line of credit from the Industrial Development Corporation of South Africa to support projects in the tourism sector. The loan will be extended at an interest rate of six months-London Interbank Offered Rate plus 8 percent for tenure of six years, chief executive Mr Charles Chikaura said.
“It has been approved and we are now waiting to sign,” he said in an interview yesterday.
“We would like to finance tourism projects in Victoria Falls, Harare and Bulawayo.”
IDBZ, a State-owned infrastructure bank, has been facing challenges in mobilising lines of credit as it remains under the sanctions list of the Office of Foreign Assets Control, an agency of the US Department of Treasury and the perceived country risk.
While the bank was recently pardoned by the US Treasury Department to freely transact with US firms and individuals, potential investors still perceive risk in the institution due to sanctions.
“The IDBZ is still looking forward to be removed from the sanctions list and anything short of that would still leave the bank in that disadvantaged situation,” said Mr Chikaura.
He added that the bank was looking at mobilising lines of credit worth at least US$100 million, “but it would really help if we are to be removed on the OFAC sanctions list”.
Mr Chikaura noted the bank was failing to fully discharge its mandate as a long-term financier of infrastructural projects due to the prevailing liquidity constraints.
Meanwhile, Mr Chikaura said IDBZ will, during the first half of next year, issue bonds to raise US$72 million for Zimbabwe Power Company and TelOne. The bond will have a tenure of between three and five years while the interest rate will “depend on market conditions”.
“The US$40 million will be for Kariba Power Station (part of the Government’s contribution towards the construction of Kariba South) and US$32 million will go towards TelOne’s fibre optic project,” said Mr Chikaura.
The bond will be open to both local and foreign investors and will have a prescribed asset status to give the bond a more attractive investment status for insurance companies, pension funds and other relevant institutions. This would also enhance the tradability of the bonds.
In October this year, the IDBZ floated a US$30 million bond for the Zimbabwe Electricity Transmission and Distribution Company. The three-year bond had a 10 percent fixed rate.