On Friday, May 18, 2018, President Emmerson Mnangagwa said Zimbabwe had received a loan from the United Kingdom, which would go towards easing the country’s cash shortages.
“For the first time after nearly 20 years, we have received a soft loan, from the British, of $100 million and the (RBZ) governor has been telling me how he has disbursed the money and as from yesterday almost every single bank in the country had received part of the $100 million received,” The Herald quoted the president as having said.
Mnangagwa was to repeat the claim at a political rally in Mutare on Saturday.
Speaking in Shona, Mnangagwa was quoted by The Sunday Mail saying:
“We now have good relations with Britain, this week, on Tuesday, they gave us $100 million to help us resolve the cash crisis in the country.”
DETAILS OF THE BRITISH LOAN:
On Thursday, May 17, 2018, the Commonwealth Development Corporation (CDC), announced it would partner Standard Chartered Bank in extending an investment facility of up to $100 million to private Zimbabwean businesses seeking capital to grow.
The CDC is the UK’s development finance arm, while Standard Chartered is a leading British bank, whose Zimbabwean unit is the oldest in the southern African country.
The five-year facility will see CDC and Standard Chartered share the default risk on up to US$100 million of new loans originated by Standard Chartered Bank Zimbabwe in the southern African state.
The investment will be used for capital expenditure and for helping businesses meet their day-to-day financing needs. The likely recipients will include firms in the food processing, manufacturing and agriculture sectors.
In an interview with the Financial Times, CDC chief executive Nick O’Donohoe stressed that the funding would not be to Zimbabwe’s government, but private firms.
While the loan will improve Zimbabwean businesses’ access to foreign currency, improve local production and reduce pressure on the country’s current account in the long term, it is incorrect to say, as Mnangagwa claimed, that the British have given Zimbabwe funds to ease its cash crisis.
While the president claimed the funds had already been disbursed to Zimbabwe, the Financial Times, which broke the story, reported that CDC and Standard Chartered Bank were in the process of drawing up a list of private firms to benefit from the facility.
The president’s statement created the impression that the $100 million loan was being directly injected into circulation in Zimbabwe, which is not the case.