Agribank secures US$30m loan

“It (US$30 million loan) is coming through anytime before the end of this month,” he said. “It is meant mostly for our corporate clients. We have already received the approvals from IDC and the Export and Import Credit Insurance for the line of credit.” 
Established in 1940, the IDC is a national develop­ment finance institution set up to promote economic growth and industrial development.

The South African government, under the supervi­sion of the Economic Development Ministry, owns IDC in its entirety.
ECIC is a self-sustained State-owned national export credit agency and registered insurer subject to supervision and regulation of the Financial Services Board.
It underwrites bank loans, supplier credits and investments in foreign countries to enable South African contractors to secure capital goods and service contracts in other countries.

Mr Malaba said the parties to the deal were now working on disbursement modalities for the much-needed external line of credit.
The State-owned bank would be targeting compa­nies in the agro-industry such as seed and fertiliser production, horticulture, cotton, dairy, tourism and tea.
While the bulk of the funding is largely earmarked for agro-focused entities, a US$5 million tranche is meant for Greenfield energy projects, Mr Malaba said.   
Approval of the loan would further demonstrate IDC’s confidence in the State-owned bank after the South African firm extended a similar amount last year in support of the local bank’s operations.

“It also demonstrates their commitment to raise the industrial capacity of local firms. This follows the real­isation that the initial loan had a far-reaching positive impact on the operations of beneficiaries,” he said.
Capacitating local industries, which requires US$2 billion to recapitalise, would help replace imports on local supermarket shelves with local products.

Zimbabwe imports 60 percent of basic products, chemicals and other equipment, mostly from South Africa.
That line of credit came in handy for local fertiliser firms — ZFC, Windmill and Chemplex Corporation.
Although not enough to cover all their require­ments, the funds helped them shore up production.
Other firms which benefited included Olivine Industries, Interfresh and manufacturing firms such as  Zimglass, Zim Copper, property developer Sunway City and Aluminum Industries.

Under the terms of the agreement, the beneficiaries will repay the loans over six years after a six-month grace period on interest and one year relief before they start repaying the principal.
Earlier Mr Malaba said that beneficiaries would also pay interest of 16 percent per annum in the first year of repayment and 14 percent thereafter.

The bank continues to play a major role in mobilis­ing resources to support agriculture at a time mostly foreign banks, which are better resourced, have been reluctant to extend loans to local firms.
Contrary to reports that Agribank had a weak capi­tal base, the bank was among the first financial institu­tions to meet the Reserve Bank of Zimbabwe’s mini­mum capital requirements.

As at December 31, 2011, Agribank had tier 1 capi­tal amounting to US$15,9 million.
Early this year, Mr Malaba said the bank was ade­quately capitalised and that it would have US$26 mil­lion capital by the end of the year.