Agribank to have strategic partner
Agribank is considering an initial public offering on the Zimbabwe Stock Exchange

Agribank is considering an initial public offering on the Zimbabwe Stock Exchange

Business Reporter
GOVERNMENT says it will seriously begin scouting for a strategic partner for State-owned Agriculture Development Bank of Zimbabwe, Agribank, once satisfied that it has put its “house is in order”.

This comes as the bank is targeting more capital injection for it to attain the Reserve Bank of Zimbabwe tier 1 bank capital of $100 million by 2020 as well as a strong balance to execute its mandate of supporting agriculture, the nerve centre of this economy. Finance and Economic Development Minister Patrick Chinamasa said current developments at the financial institution, where it posted a profit of $4,7 million and declared a dividend of nearly $1 million, showed the “house” was slowly getting to order.

Minister Chinamasa said that a strategic partner would be easier to invite once the bank was on the right track since investors looked at factors such as level of non-performing loans, level of capitalisation and risk measures put in place by the bank. “As Government, we have a policy to look for a strategic partner we have no problem when we think we are ready for that, but we must put our house in order first. “And what I am seeing, through the meeting we had (with management), the house is beginning to be in order, there is significant turnaround,” he said.

Minister Chinamasa cited factors such as significant reduction in staff costs, which have gone down to 36 percent of revenue. He said it was such factors which will help in attracting a partner. Agribank had, in the last few years, been weighed down by high staff cots. In terms of capitalization, the agro-focused financial institution had received $30 million in May 2015 and a further $10 million in December 2016, which helped strengthen the bank’s balance and turn around programme , which have started to bear some fruits.

Minister Chinamasa

Minister Chinamasa

In the period to December 2016, Agribank recorded appreciable decline in the proportion of non-performing loans, which have come down from 20 percent in December 2015 to 14 percent. Minister Chinamasa said in terms of external lines of credit the bank needs to support the strategic sector of agriculture, which is the bed rock of the economy, completion of the re-engagement programme, currently in full motion, was critical.

He said Government is re-establishing financial relations with the African Development Bank, International Monetary Fund and World. “The World Bank, as you know has soft windows for on-lending to institutions like Agribank, but currently, until we clear our arrears — and its matter under progress — we do not become eligible for those lines of credit,” he said.

Government once engaged independent advisors for the restructuring of Agribank through a private placement of 49 percent equity to a strategic partner. Agribank, owned 100 percent by Government was also considering an initial public offering on the Zimbabwe Stock Exchange to raise funds to recapitalise. 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 was in line with Government’s thrust to foster public private partnerships in recapitalising State enterprises.

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