Gemcorp Capital LLP, an independent investment management firm, has announced its plans to support the revamping of Zimbabwe’s economy with a $250 million loan for 5 years. The loan which was announced in Harare would help the country boost the importation of essential goods like electricity, fuel, and medicine.
In 2008, the Zimbabwean economy crumbled marking the climax of a decade-long economic crisis which started in early 2000 after the expropriation of land from white farmers in the country. In July 2008, Inflation rose to 231 million, destabilizing the economy.
Although the country has gradually moved out of the historic crisis, cash shortage continues to affect local businesses and the importation of foreign goods. This is where Gemcorp comes in.
The intervention of Gemcorp, which was established in 2014 to provide support for emerging markets through credit and macro opportunities has been identified as a kind gesture to the cash-strapped nation. Founded by Atanas Bostandjiev, Gemcorp marked its entrance into the emerging markets in Africa when the company offered a credit line of about $500 million to Angola at a time the country’s economy was battered because of dwindling oil prices.
“The Gemcorp Group remains focused on working with local partners and borrowers across Africa and the rest of the emerging markets to provide creative funding solutions and foster trade and investment in the region,” said Atanas Bostandjiev, Founder Gemcorp Group in Harare.
The cash shortage in Zimbabwe caused the collapse of many businesses and industries, forcing investors out of the country. Since then, it has been a battle as inflation continues to rise, while GDP contractions linger. However, the loan is expected to revitalize the economy as the ZANU-PF government continues to employ drastic measures to bring investors back into the country after two decades of prolonged misfortune.
“…with this facility, we are financing and coordinating the delivery of essential goods to help support the Zimbabwean economy. The trade finance gap in Africa remains significant and is an enduring constraint to economic development,” Atanas Bostandjiev reiterated.
In 2008, the hyperinflation in Zimbabwe was estimated to be around 80 billion percent. During this austere period, local banks faced severe liquidity crisis while many private firms were forced out of business. Although the country finally divorced its local currency for the US Dollar and another currency which eventually brought relative stability, its backlog for foreign payments according to the Central Bank is still more than $600 million.
However, Zimbabweans now look forward to a new era, hoping to forget it’s calamitous past as President Emmerson Mnangagwa continues to settle in after the post-election struggle with the opposition candidate, Nelson Chamisa.
Since winning the election in July, an appointment which has caught the public eye is that of Prof Mthuli Ncube, the country’s Minister of Finance and Economic Development. He swung into action immediately meeting business leaders and stakeholders as he moves to revive the battered economy, pinpointing the ‘currency crisis’ as the most vital issue he will be addressing.
According to Prof. Ncube, Gemcorp’s loan is a strong signal by foreign investors of their growing confidence in Zimbabwe. “I expect more investors to follow suit,” he said.
In May 2018, the government of the United Kingdom through its development finance institution, CDC Group also extended its monetary support to the debt-ridden country for the first time in 20 years. The $100 million credit facility was made available to private firms through Standard Chartered Bank.