AGRIBANK is in discussions to secure an external line of credit from a foreign institution to bolster its support to the agricultural sector beyond the $105 million allocated this year.
BY TATIRA ZWINOIRA
This comes as the bank registered a 64% increase in profit for the financial year ending December 31, 2017 to $7,89 million from $4,81 million recorded in 2016.
Responding to questions after announcing the bank’s financial result for 2017, Agribank chief executive officer, Sam Malaba said the bank failed to secure external lines of credit last year but was confident for the 2018 period.
“We did not manage to get any lines of external credit. We had to get lines of credit support from the Reserve Bank of Zimbabwe. But, this year, I can assure you we are going to at least get one line of external credit and discussions are at an advanced stage. We cannot tell you the nature of the deal as we are still negotiating,” he said.
“The $105 million to agriculture, that is a minimum because we are also looking at lines of external credit to agriculture so that figure could significantly go up by the end of the year depending on our ability to secure the extra lines of credit.”
Agribank had previously sought external credit facilities from the African Development Bank and the International Finance Corporation, taking advantage of its removal from the US sanctions list, which prevented it from getting support from international financial institutions.
“Agriculture remains an anchor for economic growth and development. Agribank is restructuring itself in order to better serve and increase lending into agriculture,” Malaba said.
He said Agribank was prioritising support to the agricultural sector, as its main strategy for the year on the back of government anchoring economic recovery on the sector.
Agribank will dedicate the $105 million in loans distributions to major subsectors of agriculture, namely, tobacco, maize, soya and horticulture.
This will be done through direct lending to farmers, strategic partnerships with key agriculture corporates such as the Tobacco Industry and Marketing Board, structured funding models and directing some of the support to command agriculture programmes
In terms of local support, Malaba said they benefitted from funding through the Reserve Bank of Zimbabwe facilities such as the tobacco export facility of $70 million, horticulture $10 million with $7 million of the latter facility already being drawn down.
Despite profit for the year being up, net interest income was down 15% to $22,02 million by the end of 2017 from $25,87 million in 2016.
Profit was spurred by growth in Agribank’s non-interest income which rose 115% to $10 million from $4,7 million in 2016 driven by growth in ICT-based transactions.
Agribank was allocated a $10 million capital injection by the government and plans to also use the external line of credit to help further grow its capital position to $100 million by year end.
Its capital position at the end of 2017 was $54,9 million.