The Reserve Bank of Zimbabwe (RBZ) is working on a new US$150 million letter of credit (L/C) to support key industries.

Foreign banks meanwhile are demanding fully funded L/Cs from domestic banks due to the parlous state of Zimbabwe's economy.

Target sectors

The L/C facility RBZ is working on aims to support imports of fertiliser, fuel and crude oil.

These are key inputs for the country's mining and agricultural sectors, which RBZ sees as two of the country's key productive sectors.

Of the US$150 million L/C facility, US$56 million will be provided for fertiliser imports ahead of the 2017/18 summer harvest while the remaining US$94 million will finance fuel and crude oil purchases.

Afreximbank support

Africa's trade finance bank, the African Export and Import Bank (Afreximbank), has also stepped in to support Zimbabwe with a US$1 billion bailout to stabilise the economy.

Foreign banks meanwhile are reportedly demanding fully funded L/Cs from domestic banks due to a worsening foreign currency crisis in the country that threatens to further jeopardise the economy.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.