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Livingstone Marufu
ZB Financial Holdings Limited (ZBFH) will in the next few weeks float over US$15 million agro-bills and working capital requirements for farmers to finance agriculture production this summer season, a top official has said.
Of the US$15 million, Government has already approved US$5 million.
The total package of US$15 million is part of efforts by the private sector to resuscitate the country’s agriculture sector.
Last week, ZBFH head – group marketing and corporate communications, Mrs Emilliah Mabika, told The Sunday Mail Business that the agro-bill papers have already been to pension funds and insurance companies.
“The bank sought and got approval from the Government to raise US$5 million to finance the 2015 to 2016 agricultural season through the floatation of agro-bills.
“The funding will compliment amounts raised previously as well as other internal sources.
“The agro-bills have a prescribed asset status that makes them suitable for investors such as pension funds and insurance companies as they have a legal requirement to invest in prescribed assets,” said Mrs Mabika.
Interest rates for the funds fall within the range prescribed the Reserve Bank of Zimbabwe (RBZ) of six percent to 18 percent, depending on the risk rating.
RBZ boss Dr John Mangudya capped interest rates at 18 percent following widespread complaints from the manufacturing sector that banks were charging extortionate interest rates on loans.
This was discouraging borrowing and resulting in low capacity utilisation in the sector.
The tenor of the ZB facility depends on the enterprises being financed, but the bank says it is critical that for “our facilities to match production cycles of clients to ensure success of the project”.
The facility is earmarked for both commercial and small-holder sectors.
The bank expects to use its wide branch network to assist smallholder clients throughout the country.
In the past, ZB floated agro-bills at different intervals worth a combined US$15 million and they were fully subscribed.
The Insurance Pensions Commission (IPEC) gave ZB the regulatory authority to raise funding for the 2016 farming season through agro-bills worth US$5 million.
This will be a one-year paper with a coupon of eight percent.
The paper is secured by a property portfolio which is independently managed by Imara Fiduciary Services.
Presenting the 2016 national budget, Finance and Economic Development Minister Patrick Chinamasa said the banking sector has set aside around US$1 billion to finance crop and livestock production during the 2015 to 2016 agriculture season.
The funds will be coordinated by the RBZ in conjunction with the Bankers Association of Zimbabwe. Under the facility, tobacco is expected to get US$598 146 427, maize (US$80 538 000), soya beans (US$25 million) and cotton (US$34, 5 million), with livestock and poultry expected to get US$60 113 973.
About US$46 259 897 is expected to be used for other agricultural programmes.
Online Reporter