Govt to dispose of 49pc Agribank stake

Government, was also considering an initial public offering on the Zimbabwe Stock Exchange as part of options to raise funds. Either way, a new investor is expected in the bank to inject fresh capital — to enable the bank to underwrite more business.
The State Procurement Board has invited advisors to spearhead the restructuring of the country’s largest financier of agriculture. The tender closes on April 17 2011.
The plan to restructure Agribank was approved by Government in May last year.
Plans to dispose of a chunk of the State’s shareholding in Agribank to private players is in line with Government’s thrust to foster public private sector partnership to recapitalise ailing State enterprises.
Agribank has met the Reserve Bank of Zimbabwe minimum capital requirements of US$12,5 million and is among the 10 enterprises targeted for privatisation.
According to the approved plan, Government would retain the remaining 51 percent and farmer organisations would be given preference to take over.
A number of foreign partners have been inquiring on Agribank. Sources say Chinese investors are keen to invest in the bank.
However, the bank has been getting lines of credit from the Industrial Development Corporation of South Africa.
The decision by Government to shed its stake comes at a time when most banks are seeking foreign partners to strengthen their capital base.
Recently, Kingdom Financial Holdings Limited completed a US$9,5 million deal with AfriAsia bank resulting in KFHL meeting banking capital requirements.
Royal Bank and ZABG Bank have since submitted their proposals to the central bank and in their proposal, they are also courting foreign partners.
The Government is presently facing serious financial limitations and is therefore ill-equipped to provide the capital required to fund more clients and expanding its revenue base.
The bank has also embarked on a five-year strategic plan whose key elements include bringing in a strategic partner, mobilisation of additional lines of credit, aggressive deposit mobilisation, IT upgrade and enhancing multi-delivery channels.
Agribank’s strong capital base, through fresh capital injection by the new partner, will change the face of Zimbabwe’s agriculture through onlending to farmers.
The Government wants to maintain Agribank’s mandate of financing farmers.
Agriculture contributes 16 percent to Gross Domestic Product and has been the major economic driver since 2009, mainly through tobacco and cotton.