The government of Zimbabwe has approved an emergency US$400 million credit facility for manufacturing companies so they can continue to import critical raw materials.

The facility is being made available via letter of credit (L/C) guarantees already being provided the Reserve Bank of Zimbabwe (RBZ - central bank).

Industry warning

The move responds to a warning last week from the Confederation of Zimbabwe Industries that manufacturing companies could be forced to halt operations if the government fails to arrest the crippling currency crisis.

The L/C arrangement means that companies will procure raw materials from foreign suppliers on credit on the strength of L/Cs that the RBZ has guaranteed.

Two months cover

The arrangement was agreed at a crisis meeting held between the manufacturers and RBZ officials.

The US$400 million facility is expected to ensure that manufacturers will have sufficient currency for raw material requirements for two months.

Scheme underway

The central bank has already been processing L/Cs according to RBZ governor, John Mangudya.

"We have been facilitating the issuance of L/Cs for local firms for the production of essential products. The L/Cs will go a long way to meet and assist firms to cater for their import requirements," he said.

Mangudya said the bank had already offered guarantees for US$100 million under the facility and more still are being processed.

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