In­debted farm­ers seek Zamco bailout

Chronicle (Zimbabwe) - - Business Chronicle - Oliver Kazunga

THE Zim­babwe Com­mer­cial Farm­ers’ Union (ZCFU) is seek­ing the takeover, by the Zim­babwe As­set Man­age­ment Com­pany (Zamco), of non­per­form­ing loans from bur­dened farm­ers.

The as­set man­age­ment com­pany, which started op­er­at­ing last year, was es­tab­lished by the Re­serve Bank of Zim­babwe in 2014 to buy out Non-Per­form­ing Loans (NPLs) from com­mer­cial banks their col­la­terised loan book.

Ac­cord­ing to the as­set man­age­ment firm it had ac­quired $528 mil­lion of the $750 mil­lion in the bank­ing sec­tor as of June 30, 2016.

A ma­jor­ity of the NPLs so far ab­sorbed by Zamco are from the man­u­fac­tur­ing sec­tor.

In an in­ter­view, ZCFU pres­i­dent Mr Won­der Chabikwa ac­cused the bank­ing sec­tor of not show­ing com­mit­ment to for­ward the farm­ers’ NPLs to Zamco.

He said this was de­spite ZCFU hav­ing lob­bied for the trans­fer of farm­ers’ NPLs to the as­set man­age­ment firm.

“It’s very un­for­tu­nate that banks have not for­warded the farm­ers’ NPLs to Zamco. We’ve in the past en­gaged the banks to have NPLs by farm­ers be taken over by Zamco so that the farm­ers have a fresh start for credit lines,” he said.

Mr Chabikwa said farm­ing as an in­dus­try was presently choked with NPLs adding that the loans were bor­rowed from fi­nan­cial in­sti­tu­tions be­tween 2009 and 2012 and banks have started tak­ing le­gal ac­tion against the farm­ers for fail­ing to ser­vice the funds bor­rowed.

“Be­ing a pri­mary in­dus­try, it means if the farm­ers re­main over­bur­dened by NPLs, we’ll not be able to pro­duce ef­fec­tively even if the coun­try re­ceives ad­e­quate rains in the up­com­ing farm­ing sea­sons.

“If agri­cul­tural out­put is low, it also means that com­pa­nies across all the value chains in the agri­cul­ture sec­tor will be neg­a­tively af­fected in terms of their man­u­fac­tur­ing ca­pac­ity,” he said.

Among other rea­sons, he said, farm­ers were fail­ing to pay for the loans due to poor agri­cul­tural sea­sons the coun­try has ex­pe­ri­enced in the pre­vi­ous years as well as high in­ter­est rates banks charged on the bor­row­ers.

“Most of our mem­bers ac­cessed the loans be­tween 2009 and 2012 af­ter sur­ren­der­ing col­lat­eral se­cu­rity mostly in the form of ti­tle deeds for houses. “And be­cause the loans were ac­cessed at in­ter­est rates as high as 35 per­cent per an­num the farm­ers are fail­ing to pay and the sit­u­a­tion has been wors­ened by ex­ces­sive droughts the coun­try has ex­pe­ri­enced over the years,” he said. Zamco chief ex­ec­u­tive of­fi­cer Dr Cos­mas Kan­hai has said his or­gan­i­sa­tion would have mopped up all the NPLs in the bank­ing sec­tor by the end of the year. The as­set man­age­ment fi rm is buy­ing out NPLs with a fo­cus to clean up the fi­nan­cial ser­vices’ sec­tor bal­ance sheets so that the in­sti­tu­tions can con­fi­dently trade and lend. The Gov­ern­ment has said that Zamco would not buy out loans that were reck­lessly is­sued with­out due dili­gence and fol­low­ing good cor­po­rate gov­er­nance pro­ce­dures. It is hoped that once the ac­qui­si­tion of NPLs is com­pleted var­i­ous resolution meth­ods to ad­dress the prob­lems em­a­nat­ing from NPLs will be im­ple­mented. — @okazunga TRANS­PORTA­TION in gen­eral is a key fac­tor in cost com­pet­i­tive­ness con­tribut­ing both in­put costs and also costs of the fi­nal prod­uct. There are many ex­am­ples of prod­ucts that fail to reach mar­kets es­pe­cially be­cause of landed costs at ports of en­try.

The NRZ has been in­volved in lots of such dis­cus­sions. The case in point for in­stance is the chrome ore ex­ports fol­low­ing the lift­ing of the ex­port ban. While the ban was fol­lowed by a fall in com­mod­ity price there has been talk on how the prod­uct could be ex­ported at com­pet­i­tive tar­iffs.

Sim­i­larly coal prices have come down. We had a trial run with one of the coal min­ers a few years ago when we moved coal to Ma­puto (Ma­puto) at a cer­tain price. But while we were dis­cussing, the com­mod­ity prices fell and by the time we moved the price of coal could not cover the trans­porta­tion costs.

This il­lus­trates the im­por­tance of rail­way trans­porta­tion costs. For ex­ports, a study has shown that the costs of in­land sur­face trans­port for a coun­try like ours to sea port and costs from

Mr Won­der Chabikwa

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