BY SHAME MAKOSHORI
STATE-RUN agricultural lender Agribank says it has lined up foreign currency-denominated loans for exporters to boost the country’s hard currency reserves following years of protracted trade deficits.
Twinned with this strategy, Agribank will be scouting for regional opportunities to unlock shareholder value, according to chief executive Elfas Chimbera, who said offshore forays had kicked off with aggressive inroads in funding domestic cane producers.
Zimbabwe’s banks generally trade in the domestic currency and most transactions including loans are in the local unit.
But Chimbera said the bank was determined to help the country overturn its trade deficit by deploying forex throughout the agricultural value chain, which suffered extensive disruptions following the COVID-19 outbreak last year.
The country recorded a US$580 million trade deficit in 2020 after exporting US$4,4 billion worth of goods against US$5 billion in imports.
“The bank will continue to support exporters in agriculture as well as its value chain and hence contribute to foreign currency generation for the country,” Chimbera said in a statement to the bank’s financial results for the year ended December 31, 2020.
“The bank grew its sugarcane market share in the Lowveld and targets to expand its presence in the region. The bank also introduced loans in foreign currency mainly targeted at exporters in the agricultural value chain.
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“The bank will continue to finance crops, that is tobacco, cotton, soyabeans and horticulture. A number of farmers in horticulture covering macadamia, fruits, flowers and avocados, among others benefited from the bank’s financing in 2020,” he added.
Agribank overturned a $1,8 billion loss in 2019 to post an inflation-adjusted $239 million pre-tax profit during the period.
The recovery tracked growth in operating income, which closed at $1,994 billion during the period, from $1,396 billion previously.
Non-performing loans declined to 1,38% in historical terms during the review period from $3,7 billion in 2019, although Agribank’s deposits increased.
Chimbera said the year 2021 would be tough but Agribank was positioned to deal with the difficult operating climate.
“The macro and business outlook remains difficult; though modest recovery is projected from 2021. The bank envisages sustained business growth on the back of anticipated agriculture recovery…the bank is positioned to record business growth in tandem,” said the Agribank boss.
He said progress had also been achieved towards transforming the bank into a land bank.
Last week, the government announced the appointment of eight top executives to lead the Agricultural Finance Company (AFC Holdings), which will be the parent company of the proposed land bank.
The new institution will provide financial support to all categories of farmers, mechanisation and promote capacity building of farmers and entities.
Announcing the board of directors last week, Lands minister Anxious Masuka said the AFC board’s mandate would be to rebuild the agricultural sector.
“The board of highly-qualified and eminent business professionals is expected to advance the shareholder mandate for agriculture recovery, growth and food systems transformation, through elevated agricultural production and productivity,” Masuka said.
“In particular, the role of the board shall be to support the overall agrarian transformation process for accelerated development of the country, to expand the provision of agriculture and rural financial services across the entire agriculture value chain from communal, old resettlement and A1, A2, and large-scale commercial farmers by resuscitating the Agricultural Finance Corporation,” he said.
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