THERE is need for the Zimbabwean government to either privatise or capitalise the Agricultural Bank of Zimbabwe Ltd (Agribank) as well as securing land tenure to ensure the viability of the bank, analysts have said.
The bank, which last week reported a loss of US$5,6 million for the year ended December 2013, is inadequately capitalised at US$12,5 million in the same period against a minimum regulatory capital of US$25 million.
The bank’s situation has been worsened by the government’s depleted finances.
In a press briefing last Friday, the bank’s CEO Sam Malaba said the inadequate capitalisation resulted in funding and liquidity challenges, inability to underwrite business growth and failure to attract significant deposits.
Economist Eric Bloch said there was need to either capitalise the bank or privatise it to ensure its viability.
“The bank is highly undercapitalized and without capital the bank cannot operate,” Bloch said. “It needs to be adequately capitalised or privatised or both.”
He said since government was broke, privatisation would be a more realistic option to restore the bank’s viability.
Bloch pointed out that there was need for the bank to impose strict lending policy to avoid having a high non-performing loan book. He said government must ensure that land tenure was securitised by making it bankable.
Economist John Robertson said without ensuring that the land is freely transferrable, there would be no incentive for those who borrow money to repay. The bank has maintained a branch network of 48 branches across all 10 provinces