FOLLOWING a big transformation at agricultural lender, Agribank, into a holding firm with tentacles across financial services, our business reporter, Melody Chikono (MC) this week spoke to AFC Commercial Bank acting chief executive officer Elfas Chimbera (EC) to understand how the former Agribank plans to drive agriculture. Chimbera says he is optimistic of a robust growth as he spearheads a transformation:
MC: Tell us about the transition from Agribank to AFC Commercial Bank.
AC: Government in 2020 approved the restructuring of Agribank into a holding company with four subsidiaries. These are AFC Commercial Bank (Agribank), AFC Land and Development Bank of Zimbabwe, AFC Leasing Company of Zimbabwe and AFC Insurance Company. The President launched AFC Holdings on April 30, 2021. The next stage is rolling out products and services under each of the subsidiaries. AFC Holdings heralds the arrival of a one-stop banking and financial services house. AFC Commercial Bank is the entity that offers commercial banking services under the group.
EC: Take us through what the changes mean to the market.
AC: AFC Commercial Bank will continue operating as a commercial bank. Our clients will not be required to open new accounts. The transformation from Agribank to AFC Commercial Bank will not disrupt current operations but enhance commercial banking services. AFC Commercial Bank will remain one of the largest in terms of branch network and the most expansive with 45 branches.
Existing loans will continue to run on the same terms and conditions agreed at the time of establishment of the loan. However, all new bank cards and loan agreements will be under AFC Commercial Bank. During the transition, AFC Commercial Bank and customers will continue to use Agribank branded material. All our branches will be rebranded to AFC Commercial Bank and the market will be advised upon full transition. The transformation presents vast opportunities for expansion. The bank will innovate around expansion of digital channels and modern banking delivery models. AFC Commercial Bank will be the banker to all AFC subsidiaries including all customers, thereby resulting in increased deposits and a growing loan book.
MC: What will be your key focus?
EC: Our primary mandate remains provision of financing for sustainable agricultural development. However, we will have a broader focus, which extends beyond the agricultural sector.
MC: Do you expect challenges during the transformation process?
EC: There are no major challenges anticipated. We will have a seamless and smooth transition. Business continuity is our focus. The main focus issue would be for adequate shareholder capitalisation. This will not only be for regulatory purposes but to enhance capacity to underwrite new business. Adequate capitalisation will be critical for provision of appropriately tenured and concessional credit facilities to all types of farmers — from A1, communal to commercial farmers. The public expectation is high and growing and we have the capacity to deliver. We are well placed to support the government’s vision for agriculture and food systems transformation. The group and its subsidiaries will play an important role for agriculture recovery and growth as part of the President’s Vision.
MC: Are there no overlaps between AFC Land and Development Bank and the commercial bank?
EC: Agricultural finance takes various forms and structures. While the Land Bank gives financial support for agricultural development, the AFC Commercial Bank will provide agricultural finance to all commercially viable farmers and entities. Besides, AFC Commercial Bank will be there to assist all farmers that would have been nurtured and transformed into commercial producers by the Land Bank and are now able to meet commercial loan conditions. In addition, farmers still require short-term funding, such funding as bridging finance, possibly in-between seasons or harvest, or discounting of warehouse receipts.
These are going to be offered under the commercial bank. AFC Commercial bank will be the bankers to all the Land Bank and other subsidiaries customers. Implicitly, customers assisted under the Land Bank will continue to enjoy normal commercial banking services, including loans, just as any other customers of a commercial bank. There will be no overlap or any form of competition between the AFC Commercial and the AFC Land and Development banks. If anything, there are significant synergies between them. AFC Commercial Bank is bringing a revolutionary change in banking services. We took time to reflect on market needs and have reconfigured ourselves to deliver what it requires.