Govt injects US$20 million into IDBZ
GOVERNMENT will inject US$20 million in fresh capital into the Infrastructure Development Bank of Zimbabwe (IDBZ), the Financial Gazette’s Companies & Markets has learnt.
The development was confirmed the IDBZ spokesperson, Priscillah Mapuranga.
“As part of government’s continued efforts to capacitate key players to grow the economy, government will be injecting US$20 million capital into IDBZ,”
“The IDBZ is expected to play a pivotal role in infrastructure development through effective resource mobilisation and providing the necessary technical lead in the packaging, marketing, resourcing and implementation of priority infrastructure projects.
“It is in recognition of this critical role of the IDBZ that government has continuously made timely interventions which have capitalised the bank and strengthened it to deliver on its infrastructure mandate.”
The development comes after government last year cleaned the bank’s balance sheet by taking over the State-owned financial institution’s legacy debt amounting to US$38 million, which it inherited from its predecessor, the Zimbabwe Development Bank.
A balance sheet, which is also known as the statement of financial position, is basically a snapshot of what the company is worth, telling the investors how much a company owns, how much it owes and its equity at a specific period. IDBZ has been operating with an insolvent balance sheet since its inception in 2005, a position which stifled growth, undermining its ability to deliver on its infrastructure mandate.
With the Zimbabwean economy on life support, credit markets remain tight, making borrowing difficult for companies with weak balance sheets.
This affected IDBZ which faced challenges in mobilising lines of credit offshore as it remained under the sanctions list of the Office of Foreign Assets Control, an agency of the United States Department of Treasury.
But now, with a clean and strong balance sheet, the bank has the capacity to mobilise funding for infrastructure development from both domestic and offshore investors who are mindful of the institution’s financial strength.
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