Zimbabwe's central bank is no longer in dire need of letter of credit (L/C) support from the African Export-Import Bank (Afreximbank) according to its vice-president of finance, administration and banking services, Denys Denya.

Speaking to the Zimbabwe Independent business weekly, he says the country's dependence on external support for essential imports has declined due to financial sector reforms and liberalisation.

Background

In 2019, Afreximbank said it would provide a revolving US$255 million L/C facility to Zimbabwe for imports of critical raw materials for the production of edible oils, fuel, fertilisers and pharmaceuticals (DC World News, 23 April 2019).

The business weekly's senior business reporter, Melody Chikono, reminded Denya this month that there was a time when the Reserve Bank of Zimbabwe (RBZ - central bank) relied on Afreximbank support specifically for L/Cs, and asked the bank official if this funding is still running.

Afreximbank response

"The central bank supported commercial banks in issuing L/C's and we confirmed these L/C's. It's now less active than it used to be because of the liberalisation they have done," Denya replied.

"Banks are coming for L/C confirmation lines. They no longer really require the central bank backing" he added.

The full Zimbabwe Independent interview with Denya, Afreximbank pledges to support local firms, can be found here.

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