BancABC’s sweet $16m deal

Chronicle (Zimbabwe) - - Business - Ti­nashe Ma­kichi Harare Bureau

BANCABC has set aside $16 mil­lion for the 2017/2018 su­gar­cane pro­duc­tion sea­son in the Lowveld, as the fi­nan­cial ser­vices group con­sol­i­dates its pres­ence in this pre­vi­ously un­der-ser­viced but crit­i­cal sec­tor.

Al­ready, BancABC has ploughed $21 mil­lion in su­gar­cane pro­duc­tion in the last four years, ben­e­fit­ing about 500 farm­ers who have av­er­age farm sizes of be­tween 10 and 20 hectares. BancABC man­ag­ing direc­tor Joe Sibanda, told The Her­ald Busi­ness in emailed responses that some of the farm­ers sup­ported in the past have boosted pro­duc­tion.

“We have set aside an ad­di­tional $15,6 mil­lion for the 2017/ 2018 sea­son. The fig­ure will vary from one sea­son to the next driven by farm­ers’ re­quire­ments for in­puts and cap­i­tal ex­pen­di­ture.

“Per­for­mance has been mixed with some farm­ers ex­celling and yet oth­ers not do­ing so well,” said Mr Sibanda.

Some of the farm­ers have achieved up­wards of 100 tonnes per hectare while a few oth­ers have pro­duced be­low av­er­age. On the whole, the BancABC su­gar­cane farm­ing project has re­sulted in av­er­age yields ris­ing from about 23 tonnes per hectare in 2011 to 72 tonnes per ha in the 2014/ 2016 sea­sons de­spite er­ratic rains. BancABC wishes to sup­port more su­gar­cane farm­ers but is be­ing shack­led by the scourge of non-per­form­ing loans. Mr Sibanda said it is im­pos­si­ble to elim­i­nate NPLs, but they can only be man­aged.

“What is im­por­tant is to try and limit the risk. Bank­ing by its very na­ture in­volves tak­ing some risks and we will con­tinue to sup­port the pro­duc­tive sec­tors of the econ­omy but in a man­ner that en­sures we also pro­tect de­pos­i­tors’ funds by tak­ing ap­pro­pri­ate mit­i­ga­tory mea­sures. We have come up with a model that en­sures this.

“As an ex­am­ple, we have re­tained the ser­vices of ex­pert cane man­agers and mon­i­tors to sup­port any farmer who may need their ser­vices to im­prove yields. This not only helps the farmer but also means the in­ci­dence of po­ten­tial NPLs in the bank is min­imised,” said Mr Sibanda.

BancABC’s in­vest­ment in su­gar­cane grow­ing presents it an op­por­tu­nity to ex­pand its loan book, es­pe­cially con­sid­er­ing that it has brought on stream one of the pre­vi­ously fi­nan­cially ex­cluded sec­tors.

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