Agribank has so far disbursed over US$80 million to the agriculture sector as it seeks to boost productivity and foreign currency generation.
The bank, which has been directed by Government to focus on its core mandate of financially supporting the agriculture sector, is targeting US$105 million agricultural financing, inclusive of both on-balance sheet and off-balance -sheet financing.
Agribank chief executive officer, Mr Sam Malaba told The Sunday Mail Business last week that total disbursements to date (in excess of US$80 million), indicate that the bank will surpass the initial target for the 2017/18 cropping season.
This comes as the bank has accessed a US$30 million line of credit from the Industrial Development Corporation South Africa (IDCSA) to support the agriculture sector.
The facility, which was approved by the IDCSA board’s investment committee last Wednesday, is priced at Libor +8,9 percent, and is expected to contribute significantly towards transforming the country’s agriculture sector.
Beneficiaries of the facility include fertiliser and chemical companies, livestock and dairy producers, soya and oil seed producers, pharmaceuticals and water treatment chemicals, among others.
IDCSA has supported Agribank since 2011 when it disbursed another US$30 million facility.
In 2012, IDCSA also provided US$30 million to support the economy, which was finding its footing after emerging from the hyperinflation era of 2008.
Mr Malaba said the latest support from IDCSA will help provide the much needed foreign exchange in support of the productive sectors, as economic recovery gathers momentum.
Further, Agribank is in the market together with FBC Bank to raise US$40 million through Agro bills.
The US$40 million is targeted at supporting the agriculture sector in the 2018/19 cropping season.
Regulatory approvals for the raising of the funds have been granted.
Agribank and FBC Bank have jointly raised a cumulative figure of US$65 million since 2013.
Over the years, the Agro bills have been oversubscribed and the two banks have consistently paid on maturity.
Mr Malaba said the two banks have agreed to expand their agricultural interventions in support of Government’s aspirations to expand agricultural production and productivity by doubling the Agro bills funding to US$40 million.
Conditions for the US$40 million Agro bills are prescribed asset status, liquid asset status, Government guarantee, tax exemption status, financial guarantee by Agribank and FBC confirming that they will settle the bills on maturity and negotiated interest rate.
Embracing the forex
Agribank has heeded the calls by Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya for banks to support sectors that generate foreign currency to ease paper money shortages and foreign payments bottlenecks.
The bank has expanded support to the tobacco sub-sector through a strategic business alliance with the Tobacco Industry and Marketing Board (TIMB) and the RBZ.
It is also supporting smallholder farmers and tobacco merchants, who got US$20 million in the previous season.
But Mr Malaba said the support will be increased to US$70 million in the 2018/19 tobacco cropping season.
Agribank is also supporting horticulture and floriculture, including cut flowers for exports, macadamia nuts and other horticulture fresh produce.
It is also implementing dairy and livestock support programmes, in conjunction with the RBZ. The initiatives are set for expansion this year.
President Mnangagwa sees agriculture as providing quick-wins and his party, Zanu-PF’s manifesto for the July 30 elections, speaks of ensuring productive usage of land.
Zanu-PF also plans to transform agriculture in the next five years to improve citizens’ livelihoods and open the sector for global business through consolidating land ownership and broadening access to finance and inputs, among other measures.
Government seeks to strengthen Agribank
Government is eager to strengthen the bank’s ability to finance agriculture and is pressing ahead with efforts to find a technical partner for it.
This is in line with efforts to turnaround critical parastatals so that they don’t take begging bowls to Government annually.
Mr Malaba said significant progress has been made with regards to preparing the groundwork on bringing in a strategic partner for the bank.
“As is required, a technical committee on Agribank has been established by Government whose main purpose is to oversee and manage the bringing in of a strategic partner for Agribank and to ensure that all the necessary approvals are granted,” he said.
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