CBZ, TDB ink mega deal

CLOUDINE MATOLA

CBZ Holdings Limited (CBZHL), a publicly traded financial services group, has signed a US$20m trade financing deal with Trade and Development Bank (TDB), which operates in eastern and southern Africa, in order to support its customers, particularly exporters, Business Times can report.

The latest development coincides with the period when a large number of companies in Zimbabwe are unable to secure funding from various financial institutions, a situation that has left many of them in a financially vulnerable state.

The deal was signed in the capital Harare this week.

Speaking to Business Times, a market leader in business, financial and economic reportage, CBZ Holdings Group CEO, Lawrence Nyazema, said exporters will benefit from the funding because  they are able to bring in foreign currency while also creating capacity for the bank to repay the loan.

“Well, the deal means CBZ can better support its customers. It’s a US$$20m facility which we are lending to our customers and clients, especially those that are in the exporting sectors. So we will give them funding to buy raw materials, to buy equipment, to buy machinery, produce what they then sell outside the country, generate revenue for the country, and generate capacity for us to repay the facility over a period of time,” Nyazema said.

He added: “The reason we are targeting exporters is we want to create a repayment capacity so that when the tenure of the facility is reached, we have foreign currency to repay TDB.

“Being able to fully repay facilities and lines of credit is important, not only to CBZ, but to the rest of financial institutions in the land. Should word go out there for whatever reason CBZ has failed to service its facility, it affects other financial institutions. Therefore, it’s important that we fully meet the terms and conditions of the line of credit, again, with specific reference to this US$20m.”

According to Nyazema, CBZ will also handle its clients’ short- and medium-term needs because they have a working capital short-term element that lasts for a year and a medium-term capex facility that lasts for up to three years. The interest rate will vary based on the credit quality of the clientele; customers at higher risk will pay more interest than those at lower risk, but the range will be between 10% and 15%, with an average of 12%–13%.

According to TDB CEO Michael Awori, giving institutions financial support allows the organization to access economic areas that they are unable to directly access.

“We have been providing financing to a number of financial institutions here in Zimbabwe, where we have a regional office, as well as across 25 member states.

This is really because financial institutions are another channel avenue for us to reach into sectors of the economy that we’re not able to reach directly. So we’ve lent meaningful financial facilities not only to CBZ, but a number of other institutions within Zimbabwe, as well as the wider region. But we’re also supporting the private sector directly.

“So we are lending to, and have lent in the past to a number of large corporations in various sectors of the economy. And we are looking to deploy more funding to corporates, together with CBZ, supporting joint clients,” Awori said.

CBZ and TDB have been working together in supporting trade and private sector development since 2007.

The partnership began with TDB Group extending its support to CBZ Bank’s customers in need of working capital, and in support of imports. Over the years, it has evolved to cover broader financial and developmental support.

Notably, TDB Group and CBZ Bank have worked jointly to provide substantial assistance to the Government of Zimbabwe through the Ministry of Finance.

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