IDBZ sets US$250 million target

29 Oct, 2017 - 00:10 0 Views

The Sunday Mail

The Infrastructure Development Bank of Zimbabwe is in discussions with Treasury for a further capital injection as the bank seeks to achieve US$250 million capitalisation in the medium-term, sources familiar with the talks say.

Last year, Government – which owns 99 percent of IDBZ – recapitalised the bank to the tune of US$20 million and a programme is being worked out for Treasury to “continuously support the bank” and give confidence to external investors.

IDBZ embarked on a multi-phased recapitalisation programme two years ago, and this involves courting local institutions like pension funds to invest in the bank.ast year, Government – which owns 99 percent of IDBZ – recapitalised the bank to the tune of US$20 million and a programme is being worked out for Treasury to “continuously support the bank” and give confidence to external investors.

“Obviously, IDBZ wants more from its principal shareholder and these are the discussions currently going on,” said a source who spoke on condition of anonymity.

“Government has to demonstrate that it supports the bank, which is what is happening now, and this will give confidence to potential local and foreign investors.

“The second phase obviously is to look at local institutions such as pension funds while the last phase would be to look for foreign capital from global development institutions.”

An official at Treasury added: “After the removal of the bank from the US sanctions list by the Office of Foreign Assets Control, the only hurdle for the bank to attract capital is arrears to multi-lateral financial institutions.”

Since dollarisation, IDBZ has relied on short-term business.

The business model was necessitated by the short-term nature of funding on the domestic capital market as well as the bank’s inability to access meaningful long-term funding from international capital markets through lines of credit.

This situation was due to, among other constraints, a legacy debt overhang and the impact of illegal US sanctions.

As such, IDBZ experienced a significant “mandate drift” as capacity to fulfil long-term infrastructure projects was hamstrung. Through Government’s interventions, the legacy debts were hived-off, leaving a clean balance sheet. The bank also significantly reduced non-performing loans from its portfolio. Zimbabwe has a huge infrastructure backlog and requires massive capital injection to fund various projects in energy, ICTs, water, transport and housing among other areas.

Share This:

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds