Norfund signed an agreement on Monday March to invest just under $ 5 million (30 million NOK) in equity in NMBZ Holdings in Zimbabwe. The investment in NMBZ Holdings, will primarily go to capitalizing its largest subsidiary, Bank NMB Bank in Zimbabwe. This represents a 9 percent stake in NMBZ Holdings, and is the first Norwegian direct investment in the country following the difficult economic and political situation that has characterized Zimbabwe over the past 10-15 years. Norfund will also invest USD 1.4 million in subordinated debt in NMB Bank, which will facilitate additional liquidity to the bank as the bank will on-lend this capital to the market that is starved for liquidity. The economy has improved significantly since the dollarization of the economy, but is still in dire need of foreign direct investment. The private sector must be rebuilt up to create jobs and development, and local banks have a very important role in the financing of this. Norfund is very pleased to contribute to growth in the business and strengthen the financial sector in a country with great opportunities. The timing of the transaction is also very significant, as the country will go to the polls this weekend for a referendum on the elections to be held later this year.
Norfund is the Norwegian Foreign Ministry’s instrument for supporting development of industry in developing countries through commercial investments. The financial sector is one of the institution's main areas of focus, and the fund's strategy is to go into countries with high political risk because businesses often have difficulty securing good financing. In partnership with NORAD, Innovation Norway and the Norwegian Embassy in Harare, Norfund has evaluated the investment and political environment and found an improvement in the situation in the country, and concluded that the conditions in the country are stable enough to justify investments in Zimbabwe.