Agribank secures $98.6 million loan

Published: 05 September 2013

THE Agricultural Development Bank of Zimbabwe has secured a $98,6 million loan from the Brazillian government to boost the agricultural sector as the country continues to reel under a high food import bill.

In an interview yesterday, Agribank chief executive officer Sam Malaba said the development came hardly six months after the bank was removed from the sanctions list by the European Union in March this year.

The bank has been on the sanctions list since 2008.

"We signed the agreement on Tuesday on a government-to-government basis. The money will be used to finance the purchase of agricultural machinery and equipment," Malaba said.

Malaba could, however, not comment on the interest rates and whether farmers would be required to submit collateral in order to access funding.

"It depends on the source of the funding. We will discuss with government on what will be the conditions," he said.

Farmers have been failing to access funding from banks due to lack of collateral as the issue of land tenure remains unresolved.

Government is still to implement the use of acceptable forms of land tenure and security, including the negotiable 99-year lease.

On Tuesday, the United Nations World Food Programme (WFP) estimated that 2,2 million people could require food aid by early next year due to poor harvests realised in the previous cropping season.

The mid-term fiscal policy review for the Second Round Crop and Livestock Assessment Report from the Ministry of Agriculture indicated that 798 600 tonnes of maize would be realised in 2013, down from an initial projection of 1 100 000 tonnes.

The poor maize output is mainly a result of the erratic rainfall pattern witnessed during the 2012/13 season, which affected yields and hectarage.

Out of the 1 442 845 hectares planted, 177 605 hectares were written off. This reduced harvested area from 1 265 237 hectares to 967 229 hectares during the same period.

By May this year, the import bill stood at $3,2 billion compared to exports of $1,3 billion resulting in a trade deficit of $1,9 billion.

Malaba said the bank was also negotiating with PTA Bank, African Development Bank, and African Export Import Bank for additional lines of credit.

The agricultural sector requires an estimated $2 billion for it to perform optimally.

Plans are already underway by government to dispose of a significant stake of the bank to a strategic partner to boost the bank operations.

The government engaged financial and legal advisers for the bank and due diligence reports have been submitted to the technical partners while an evaluation would be conducted before privatisation takes place.
- newsday