To help Zimbabwe import essential goods like fuel and medicine, Gemcorp- a London based emerging market fund, will offer the country a $250 million loan. Since abandoning its own currency for the US dollar in 2009, Zimbabwe is facing the worst shortage of cash dollars. This has made it difficult for companies to pay for imports.
According to the central bank, Zimbabwe’s backlog for foreign payments is over $600 million. Atanas Bostandjiev, a former executive of investment bank VTB capital who created Gemcorp said “with this facility, we are financing and coordinating the delivery of essential goods to help support the Zimbabwean economy”.
Mthuli Ncube, Zimbabwe’s finance minister, noted the loan was a show of confidence in an economy with a serious liquidity crisis and unemployment rate of over 80 percent. Without loans from global lenders, Zimbabwe has struggled to secure credit lines and foreign investments required to boost the economy.
Britain’s development finance institution CDC became the first British company to extend a direct commercial loan to Zimbabwe in more than two decades. In May 2018, the company provided a $100 million facility to private firms through Standard Chartered Bank.
Ncube said “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”.