THE Agricultural Bank of Zimbabwe (Agribank) is finalising negotiations with the Industrial Development Corporation of South Africa (IDCSA) on a US$30 million fund for possible disbursement as of October this year.
The bank’s director of marketing and business development, Joseph Mverecha, said the funds were expected to bring relief to cash-strapped sectors of the economy. Agribank received a similar facility last year which was disbursed to several productive sectors. About a third of the funds were disbursed to the agricultural sector and this was expected to be the same this year.
The bank, which is to be privatised according to a cabinet approval of May 2011, intends to maintain its bias towards the agricultural sector.
“There are indications that several investors are taking a long term view of the economy, the central role of agriculture in the economy and the strategic role of Agribank at the heart of agriculture and agro-based manufacturing production value chain. These investors have shown interest and will get an opportunity to expressly take up equity in the near future,” said Mverecha.
The privatisation exercise will see government, the sole shareholder, retaining 51% shareholding after disposing of the remaining stake to a strategic partner. Mverecha said government had floated a tender for a financial advisor for the privatisation process.
Privatisation would also help Agribank to meet the new US$100 million minimum capital requirement as recently stipulated by the Reserve Bank of Zimbabwe.The bank is currently capitalised at US$13,7 million after government injected an additional US$1 million early this month.
Agribank this week reported its financial results for the half year ended June 30 2012, in which it made an after tax loss of US$2,4 million, which loss it attributed to increased operating expenses. The bank had over the past year invested US$2,7 million in ICT upgrade and branch connectivity, which increased operating costs and resulted in the loss.
The bank said it had put in motion a process for comprehensive review of all operating costs and was implementing a cost containment programme that would yield visible gains to the bottom line in December this year.
Revenue in the period under review grew slightly to US$9,2 million compared to US$8,7 million in the comparative period last year. The bank’s total asset base increased by 7% to US$110,2 million while deposits grew by 13% to US$78,2 million. Mverecha said interest income constituted 40% of revenue.
Mverecha said although the bank was pursuing cost cutting and control measures, it was not considering any retrenchments and would continue exploring new revenue lines through new product offerings and strategic partnerships.