Govt directs Agribank to skew lending portfolio
GOVERNMENT has directed the Agriculture Bank of Zimbabwe (Agribank) to skew its lending towards agricultural projects in order to boost production and activity in the sector.
In the financial year ended December 31, 2016, Agribank, which is wholly-owned by Government, advanced $37 million to individuals while agriculture received $5 million.
Finance and Economic Development Minister Mr Patrick Chinamasa told the bank’s management during an annual general meeting (AGM) on June 12, 2017 their resources “should be to farmers and agriculture-related activities”.
“We are going to insist on that,” he said.
However, Agribank chief executive officer Mr Sam Malaba told The
Sunday Mail Business recently that the bulk of the lender’s portfolio was already channelled to agriculture as most individual borrowers were smallscale farmers.
“The issue is that basically a significant amount of that lending to individuals would also be to those who are implementing farming projects.
“But the way we were recording it (the loans), we were not recording purpose and what will happen now with the credit registry system in place, we are now going to record the purpose of the lending.
“So we will now have much better data, that even if it is an individual borrowing, he could be borrowing for a chicken project or for a piggery, whatever it is; so we will still be able to link it to agriculture,” said Mr Malaba.
According to Agribank, the reported $5 million allocation to agriculture in 2016 excludes $26 million of loans — most of which were agriculture-related loans — hived off by the Zimbabwe Asset Management Company (Zimasco), a unit of the Reserve Bank of Zimbabwe (RBZ) established specially to take over toxic assets.
Most farmers have been failing to repay bank loans, with statistics showing that a quarter of the $845 million warehoused by Zamco are from the agricultural sector.
Agribank believes it can be able to prevent rising defaults by increasing salary-based loans meant for the sector.
“NPLs (non-performing loans) under individual loans are very low. You are not like working for the season to repay, it’s a monthly repayment,” said Mr Malaba.
Risk-averse banks are tightening lending, with the adverse effect that productive sectors of the economy have been starved of resources.
Agribank is presently shoring up investments to smallholder farmers with ready markets to sell their produce.
Out-grower farming schemes that have partnerships with established businesses such as Cairns Foods Limited and Norton-based Best Fruit Processors are also being prioritised.
The lender is one of the three Stateowned enterprises that publish its financials. In the first five months of the year to May, profit topped $1,8 million on the back of interest earned on the capitalisation of Treasury Bills.
Initially, the bank had projected a profit of $463 000 for the period.