The Republic of Zimbabwe
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4.1 Introduction

One of the most important requirements of successful exporting is the availability of necessary funds. These funds are mostly needed by the exporter as working capital to allow the procurement of production inputs before receipt of export proceeds.


This section introduces the basic aspects of export financing and credit insurance available in Zimbabwe. Being a complex subject, a lot of detail has been deliberately omitted. The relevant financial institutions should be contacted where more details are required.


4.2. Export Finance

Exporters can finance themselves from their own resources, but this is not always possible especially for relatively new and small exporters.

Alternatively, the funds may come from the importer if he/she pays for the goods at the time of placing the order, or before shipment. However, the amount of business done on this basis is negligible, most transactions are done through letters of credit or open account. Payments may be made on sight of the export documents, or after an agreed period following the sighting of the documents.


It may, therefore, become necessary for the exporter to obtain credit from a bank or some other financial institution.

Export financing needed by exporters may be classified as pre-shipment credit and post- shipment credit.

4.2.1 Pre-shipment Credit

The exporter needs these funds as working capital to:

  • procure raw material for the export goods;
  • process or manufacture the export goods;
  • pack the goods for export;
  • transport the export goods to seaport or airport or railway siding of departure or destination (depending on the terms of delivery);
  • pay for other export-related services like insurance, documentation, port handling, warehousing, etc.

4.2.2 Post-shipment Credit

These are the funds required as bridging finance for the exporters between the shipment of the goods and receipt of payment from the importer. The funds enable the exporter to continue in business during this period.



4.2.3 Sources

Export finance in Zimbabwe is obtainable through merchant and commercial banks. Exporters in need of such finance are advised to contact their bank managers.

Examples of factors taken into account by banks when considering proposals for export credit facilities include:

  • capability of the exporter to execute the orders within the stipulated delivery schedules;
  • type of goods to be exported;
  • method of payment agreed upon with the importer;
  • period for which finance is required;
  • financial viability of the export contract;
  • whether the amount asked for is commensurate with the company’s export turnover;
  • whether appropriate arrangements have been made to import the necessary raw materials or components;
  • the spread of risk;
  • the economic and political status of the importer’s country;
  • availability of security;
  • whether appropriate export credit insurance cover is available;
  • other lending criteria as stipulated by individual banks.

4.2.4 Types

There are four facilities, which can be used to finance exports. They are:

  • Acceptance credit facilities;
  • Off-shore loan facilities available through merchant and commercial banks;
  • Overdraft facilities;
  • Reserve Bank of Zimbabwe Export Finance Scheme.


4.2.5 Acceptance Credit Facilities

Acceptance credit facilities are used to finance stocks or imports of raw materials. Under this arrangement the exporter draws a bill on the lending bank, which in turn discounts the bill on the local money market.

The discount (interest) is determined by prevailing conditions on the money market. The lending bank will then advance the net proceeds (i.e. face value of the bill less the discount and commission) to the exporter.

Bills may be drawn for periods of up to 90 days and the bills may be revolved after maturity, depending on circumstances.



4.2.6 Offshore lending Facilities arranged by Commercial and Merchant Banks

The Reserve Bank of Zimbabwe has allowed commercial and merchant banks to arrange offshore loan facilities for the exporting sector. The funds are made available for a short-term period of 180 days. The low interest rates on these funds help exporters to remain competitive in the international markets.


4.2.7 Overdraft Facilities

Overdraft facilities are granted by commercial banks. Drawing under the facility takes the form of overdrawing the current account up to the amount that has been agreed upon with the bank. Interest is charged on the outstanding balance of the overdraft. The borrower has the flexibility of repaying or reducing the loan amount as and when he/she is in a position to do so.

  • Reserve Bank of Zimbabwe Export Finance Scheme

The Reserve Bank of Zimbabwe has put in place a Pre and Post-Shipment Export Financing Facility (PPEFF).

Through the facility, Authorised Dealers (banks) shall extend credit to eligible exporters. The facility shall be used for financing working capital requirements under the following export activities:

  • purchase of raw materials (both imports and domestic);
  • purchase pf finished goods for export;
  • purchase of semi-finished goods for re-export;
  • freight and insurance costs; and
  • other production and export related expenses.



In order to be eligible for consideration by the bank, the exporter should meet the following criteria in addition to the bank’s own credit assessment criteria:


  • the borrower should have confirmed orders or letters of credit as evidence of having a confirmed buyer for the export;
  • the exporter should not have overdue export receipts and is in the green status as confirmed through Computerised Export Payments Exchange Control System (CEPECS) flagging framework;
  • the exporter has not accessed the facility through another bank. The exporter shall furnish the bank with written declaration in the Form provided by Exchange Control.


Terms and Conditions

Tenor: 180 days

Pricing and Costs:   All-inclusive charges of 8% (refinancing interest rate of 7.5% per annum; banks to charge the exporter an additional administration fee of 0.5%)



4.3 Export Credit Insurance

In order to be competitive in international markets, exporters have to offer, among other things, favourable terms of payment to the importers, such as credit terms. Extending credit terms has risks, and this is why exporters are advised to protect themselves by taking out export credit insurance.


4.3.1 Risks involved in extending credit terms to foreign customers

Commercial Risks

  • Insolvency or bankruptcy of customers;
  • Protracted default i.e. failure of the customer to pay an undisputed debt within four/six months of the due date;
  • Repudiation i.e. failure or refusal by the customer to accept delivery of the goods.


Political Risks

Some of the events which can give rise to political risk include:

  • Blockage or delay in the transfer of payment to Zimbabwe owing to sudden change in exchange control regulations or cancellation of import licences;
  • War or civil strife in importer’s country;
  • Default of the foreign government, (i.e. customer’s government).

In order to protect exporters against the above and similar losses, the Government of

Zimbabwe introduced the export credit insurance scheme.

4.3.2 Benefits of Credit Insurance to Exporters

  • Protection against non-payment;
  • Ability to take on more business and break into new markets by offering favorable credit terms to potential buyers;
  • Enhanced chances of obtaining better credit facilities from bankers by ceding the insurance policy as collateral security;
  • The credit insurance companies also (i) assist in following up slow payers; (ii) help with the collection of overdue accounts; (iii) continually monitor buyers’ credit worthiness and payment habits.



4.3.3 Types of Cover Offered

Pre-Shipment Cover: provides protection to exporters who manufacture or procure goods to customer specifications and where substantial loss could result if shipment of the goods is prevented because of the risks already mentioned. It provides protection from the time the order is received by the exporter until the time it is shipped from Zimbabwe.

Post-Shipment Cover: protects the exporter against overseas credit risks from the time the shipment is made until receipt of payment from the importer.

Transit Risks/Consignment Stock Cover: covers losses arising from war, revolution, and confiscation of goods while in transit or goods held in stock in a foreign country.

Cover for Banks: protects lending banks against insolvency or protracted default on the part of an exporter who they have financed.

Medium and Long Term Insurance: covers the export of capital goods or services on credit terms of more than two years against both political and commercial risks.

4.3. 4 How to Insure

It is advisable for exporters and would-be exporters to have a valid export credit insurance policy all the time. This is necessary to avoid costly delays which might arise if application is made when one is already negotiating exporting business.

In order to obtain a policy the exporter is required to complete a proposal form which is available from credit insurance companies in Zimbabwe.

The proposal form requires information, which will be used by the export credit insurance companies to analyse and issue a quotation for the customer’s consideration. The quotation will also advise the terms and conditions under which the policy will be issued.

Some of the factors that are taken into consideration are:

  • Economic and political conditions in the countries of destination;
  • Anticipated export turnover;
  • Whether cover is required for all markets or selected markets;
  • Terms of payments;
  • Credit worthiness of buyers;
  • Whether buyers are private companies, associate companies or government bodies;
  • Previous loss experience of exporter.

The insurance companies require that clients inform them of their potential customers whenever they are negotiating for specific export orders or contracts. This enables them to conduct investigations on the credit worthiness of the potential customers so as not to delay the transaction.

Whilst it is advisable to take export credit insurance well before the conclusion of export negotiations or shipment of goods, credit insurance companies in Zimbabwe are very flexible in their approach of giving assistance to exporters on matters linked to credit insurance. Each case is treated on its own merit.




4.3.5 Credit Insurance Companies in Zimbabwe


Credit Insurance Zimbabwe Limited

Credsure House

69 Sam Nujoma Street


Tel: (04) 738944; 706101

Fax: (04) 706105



Export Credit Guarantee Corporation

6 Earls Road, Alexandra Park


Tel: (04) 744644; 745565; 745452; 745869

Fax: (04) 744 644








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