Foreign funders are pulling out of Zimbabwe as international companies limit funding for their local operations in a country that is battling foreign exchange shortages. Photo: AP

HARARE – Foreign funders are pulling out of Zimbabwe as international companies limit funding for their local operations in a country that is battling foreign exchange shortages.

Africa Guarantee Fund – designed and funded by the African Development Bank in partnership with Danish and Spanish investors – has withdrawn its investment as the guarantor of investment notes issued by Zimbabwe’s Untu Capital. 

The notes are listed on the Financial Securities Exchange in Zimbabwe.

Untu Capital said the Africa Guarantee Fund had cited the current economic environment and failure to remit their guarantee fees as a reason for withdrawing. Other companies such as British American Tobacco and AB InBev have also failed to remit their dividends from the cash parched southern African country.

“The company has so far failed to secure foreign currency allocations to remit the Guarantee Fees,” Untu said. “The company will continue to engage the Reserve Bank of Zimbabwe through its bankers for an allocation of forex for the amounts due on the AGF Guarantee.” 

It is not immediately clear how much is outstanding in guarantee fees. 

Zimbabwe has been facing worsening foreign currency shortages over the past few years and this has crippled imports of key supplies such as fuel, medicines and raw materials for companies.

Foreign companies have limited funding lines for local subsidiaries while capital investments have been delayed.

“Nothing has changed and it’s getting riskier for the SA companies to keep advancing funding facilities,” said an executive in a South African-controlled company.

“As things stand, there has been no improvement on the foreign currency situation and the impact will manifest when local subsidiaries fail to sustain operations.” 

The Zimbabwe unit of Nampak recently said it was limiting its exposure as a result of uncertainties in the country.

The group said its South African holding company had limited support at the commencement of the third quarter, thereby curtailing escalating exposure to Zimbabwe.

BUSINESS REPORT