Story by Stanley James, Business Editor
THE African Export-Import Bank (Afreximbank) is working with the Reserve Bank of Zimbabwe (RBZ) to implement the Letters of Credit facility worth US$50 million in support of industrial productivity.
RBZ authorities revealed in the latest foreign exchange mobilisation report that the operationalisation of the facility is being worked out.
Once finalised, banks will start issuing letters of credit in support of the production, manufacture or acquisition of raw materials, equipment, fertilisers and agrochemicals during the first quarter of the year.
Industrialists believe that letters of credit will also help boost industrial performance.
‘‘This is a revolving facility which is also key in the entire production value chains so the move is much welcome,’’ said the president of Confederation of Zimbabwe Industries Mr Kurai Matsheza.
‘‘In terms of overall support then it is the exporters that will benefit, basically such support mechanisms are also needed within the economy,” said industrialist, Mr Gladman Chifamba.
President of the Chartered Marketers Association Mr Sham Hokonya noted, ‘‘It is all a reflection of how the monetary authorities are working towards growth in the economy so indeed such aspects are definitely a step in the right direction.’’
A Letter of Credit is defined as a written undertaking by a bank to honour obligations in respect of the importation of goods on or before a certain time, subject to the exporter complying with all the conditions of the contract.
The issuance of letters of credit is being considered by monetary authorities as strategic in supporting the balance of payments position of the economy.