CAIRO headquartered trade finance institution; African Export- Import Bank (Afreximbank) has extended US$150 million to the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) to settle its outstanding debts.
The development comes at a time when ZETDC, a subsidiary of ZESA Holdings is saddled by US$373,8 million debt , which it has not been servicing.
Efforts to get a comment from the ZETDC managing director, Julian Chinembiri were futile as he was said to be in a meeting. But well-placed sources at ZETDC confirmed the development.
“ZETDC was granted a long-term loan of $150 million by Afreximbank which will be used to settle outstanding debts,” said the source. This will go a long way in improving the company’s credit rating.”
In its financial statements for the year to December 2014, ZETDC recorded a loss before tax of US$118,3 million from a profit of US$22,3 million comparable prior year.
The company’s current liabilities exceeded its current assets by US$727 million.
The loss making position and negative working capital was due to non-performance debtors which resulted in provision for credit losses of US$567,6 million.
Zimbabwe’s beleaguered companies have been finding it difficult to secure funding from liquidity-starved local banks.
Local banks have been finding it difficult to lend long-term due to the predominance of short-term deposits in the market, and attempts to seek foreign lines of credit have been frustrated by the country’s high risk profile.
Most Zimbabwean companies are struggling to repay loans they borrowed from local banks due to punitive interest rates obtaining in the economy.
Recently, Denys Denya, the Afreximbank vice-president in charge of finance, credit risk, administration and banking services, said the financial institution was committed to helping the country revive its economy and could give long-term credit facilities of up to seven years.
He however said no company from Zimbabwe had sought such a facility. Instead, Zimbabwean companies surprisingly preferred loans of up to three years.
Afreximbank has been giving Zimbabwe a lot of support over the past years, in bigger amounts targeting sectors like minerals and financial services sectors, among many others. -FinacialGazette