ECOBANK Zimbabwe Limited injected US$400 million into industries’ trade finance requirements in 2021, a senior executive told businessdigest this week, noting that the pan-African financial institution was pressing ahead with its domestic expansion drive.
In an interview, Ecobank Zimbabwe head of corporate banking, Christopher Mutasa said the growth impetus had been boosted by fresh opportunities unlocked by last year’s launch of the African Continental Free Trade Area (AfCFTA), a US$3,4 trillion regional bloc with a footprint extending to 1,2 billion people in 54 countries.
Trade barriers would be removed from about 90% of goods emanating from the region in a move seen by many economies as a big boost to growth and economic recovery.
Zimbabwean companies have been positioning to tap into the big market, and the Ecobank boss said the financial institution was ready to fund them to take advantage of unfolding opportunities.
He said the pan-African financial institution was also instrumental in issuing guarantees for power utility Zesa Holdings’ electricity imports.
Mutasa said Ecobank was among financial institutions that have been extending lines of credit and guarantees for cooking oil producers and fuel importers, some of whom struggled to access cheaper foreign currency on the forex auction system last year.
Leveraging on its vast African footprint to secure lines of credit for the Zimbabwean market, the bank also drove production in mines during the period, Mutasa added.
“We have done letters of credit which saw us facilitating trade in a number of industries ranging from fuel, cooking oil, fertiliser, chemicals, mining suppliers and construction among others,” Mutasa said.
“I would say we made US$400 million available in 2021. This is a function of credit lines and our regional muscle allows us to tap into those credit lines,” Mutasa said.
He noted that Ecobank was anticipating a positive 2022 and was likely to surpass its 2021 performance.
Ecobank Zimbabwe, which celebrated its 10th anniversary on the domestic market last year, has transformed from a lower tier financial institution to earn a place among Zimbabwe’s top three lenders.
Headquartered in Lome, Togo, the financial institution currently boasts 12 branches across Zimbabwe.
Ecobank segments its businesses in Africa into four geographical regions.
These reportable operating segments are Francophone West Africa; Nigeria; Anglophone West Africa; Central, Eastern and Southern Africa.
In Zimbabwe, Ecobank’s interventions into the energy sector were acknowledged this week by data from the Zimbabwe Energy Regulatory Authority (Zera), which showed fuel consumption rose to almost 1,2 billion litres during the 11 months to November last year, compared to 1,04 billion litres in 2020.
Diesel consumption increased to 711,5 million litres, up from 676, 7 million litres previously, according to the data.
Zimbabwe consumed 440,7 million litres of petrol during the period, compared to 359 million litres during the same period in 2020.
In a way, the surge confirmed sharper demand across markets as industries returned to production following a tough 2020, when damaging lockdowns were rolled out to fight contagion as the Covid–19 scourge shook the markets.
Government implemented its toughest three-week industrial shutdown in April 2020, which saw entire streets cleared off, as companies were ordered to send staff back home to save their lives.
This triggered depressed demand for fuel.
Some global suppliers were scurried to find extra storage facilities as demand dropped, but as the world came to terms with the pandemic last year, Zimbabwe’s industries returned to production, with firms and government working out ways of navigating health risks.
Prosper Chitambara, chief economist at the Labour and Economic Development Research Institute of Zimbabwe holds the same view; “In 2020 we had more Covid-19 restrictions, which obviously restricted movement and economic activities,” Chitambara said.
“The situation was better last year. We had improved movement and economic activity was much higher,” he added.
In August, central bank data showed the country’s manufacturing sector had emerged from the crossfire of Covid-19-induced lockdowns to extend a bounce-back that had been registered since the second quarter.