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CDC and Standard Chartered share risks in $100 million fund for post-Mugabe Zimbabwe

ImpactAlpha, May 21 – Zimbabwe has been coaxing back private investors since the end of Robert Mugabe’s 37-year-rule last November. The new $100 million lending facility for small businesses is among the largest investments in the country’s private sector in years.

CDC Group, the U.K.’s development finance institution, will share the default risk on loans originated through Standard Chartered Bank Zimbabwe, a subsidiary of the British bank. The fund will provide local companies with hard-currency financing and “demonstrate to commercial investors that the economic environment is ready for further financing,” said the CDC’s Nick O’Donohoe.

Zimbabwe has a well-educated workforce and fertile agricultural land, but decades of economic isolation, political volatility and hyperinflation has “de-industrialized” the country, driving workers into informal sectors, according to a report from the Global Impact Investing Network.

The new fund will provide financing and working capital in food processing, manufacturing, agriculture and other sectors. Impact investors have invested about $375 million in the country since 2001, and a few investment firms with foreign backing, such as Takura Capital Partners, and outside venture capital investors, including Vakayi Capital, have remained active in small-business finance.

Last month, CDC and Standard Chartered launched a $150 million working capital fund for small businesses in Africa and Asia. Standard Chartered’s Sunil Kaushal said “sharing commercial risks with development partners helps deploy further capital into the continent, supporting the Sustainable Development Goals.”

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