HARARE: The African Import Bank (Afreximbank) guaranteed interbank facility now has $136 million after local banks contributed a further $16 million as confidence in the system which has the function to distribute liquidity grows.
The facility, the African Export Import Bank Trade Debt Backed Securities (Aftrades), was launched in March with an initial pool of $100 million to help in the distribution of liquidity in the banking sector. The Reserve Bank of Zimbabwe (RBZ) reported in July that the facility had grown to $120 million.
Speaking at the KPMG 2015 IFRS and business seminar yesterday in Harare, RBZ financial markets deputy director, William Manhimanzi said local banks have more confidence in the facility, which is guaranteed by a foreign financial institution.
“When we first started the facility, many local banks were sceptical, but as time has moved on more banks are participating because the risk is borne on the external financial institution,” Manhimanzi said.
The $16 million comes as a result of more banks participating in the interbank facility since July, as a way of extending loans to each other for a specified period of time. The RBZ financial markets division is responsible for overseeing the interbank facility.
Manhimanzi could not be drawn into revealing the banks that contributed the $16 million. The Afreximbank-guaranteed facility was set up to prevent market segmentation resulting in liquidity shortages and banks having huge surpluses.
It was also meant to lower the risk of borrowing among banks by transferring it to an external financial institution and thus encouraging confidence in lending among banks. RBZ targets to raise $200 million for the facility to provide additional lines of credit to the market.
The interbank facility is managed by RBZ as an agent for Afreximbank for the purposes of managing the surplus and deficit participants’ requirements. The interbank market allows banks to extend loans to one another for a specified term. Most interbank loans are for maturities of one week or less; the majority being overnight.
Through the facility the surplus banks’ risk under Aftrades would be transferred offshore to Afreximbank in an effort to prevent a liquidity crunch. KPMG invited RBZ to their seminar to offer insight into the financial markets, as they focused on the new requirements for the audit report.
