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July 24, 2011

Foreign credit opens up for Zimbabwe cotton, tobacco sectors

 Zimbabwe's central bank has approved $1.5 billion this year in foreign lines of credit sourced by local banks, mostly to fund the agriculture and manufacturing sectors, Governor Gideon Gono said on July 20.

The African country's economy is growing again after a decade of collapse marked by hyper inflation and foreign currency shortages, which forced most companies to shut down.

"We have as of July 17 approved $1.5 billion in lines of credit mostly for tobacco, cotton as well as to support industry and commerce," Gono told a meeting of bankers and industry executives.

Gono said the banks, which need central bank approval to negotiate lines of credit above $5 million, had secured the funding from foreign financial institutions.

Zimbabwean firms say they have struggled to secure funding to boost production and that banks charge high interest rates for loans while demanding repayment over too short a space of time.

Foreign lenders like the International Monetary Fund and World Bank and foreign investors have withheld their support, to press the government into implementing more political reforms.

Reuters

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