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Martin Kadzere Senior Business Reporter
THE Infrastructure Development Bank of Zimbabwe’s $15 million medium-term energy bond was fully subscribed for, chief executive Mr Charles Chikaura said yesterday.

IDBZ issued two bonds in December last year worth $65 million, split into $50 million for power generation and $15 million for the completion of the prepaid metering system.

“The $15 million (bond) has been fully subscribed for and the $50 million is still open,” Mr Chikaura said in a sideline interview after the launch of its home save account.

The bond was snapped up, mainly by local investors despite biting liquidity constraints.

On the $50 million bond, Mr Chikaura said the bank would initially release $11 million for rehabilitation of Harare power station and the remainder will go towards expansion of Kariba Power Station. IDBZ has since been given approval by Finance Ministry to raise interest rate to 9 from 8 percent to make the offer more attractive. On the home save account, Mr Chikaura said the facility was designed to help prospective home owners to save towards the purchase of residential stands or houses.

The facility will be first rolled out on a pilot basis under New Marimba housing project.

Mr Chikaura said the home save account was meant to mobilise savings and channelling the resources towards the provision of decent accommodation. The account attracts no service and maintenance fees to avoid erosion of savings by the charges.

In addition, the interest earned is exempted from withholding tax, meaning savers will earn tax free returns on investment. Apart from IDBZ banking halls, the account can also be opened through the bank’s agents such as POSB and corporate banking institutions that will sign on for accepting deposits from the clients.

The target market for the product will comprise low to middle income earners and civil servants.

Zimbabwe has a housing backlog of about 1,25 million units due to rising housing demand in urban areas against constrained delivery of new stock. “This is a pilot project (New Marimba) which will also be taken to major cities across the country depending on the availability of land,” the bank’s executive director (infrastructure) Mr Desmond Matete said. The bank was targeting to build up to 30 000 units by 2018, with an annual target of at least 5 000 units, said Mr Matete.

Meanwhile, the Government has taken over IDBZ’s $40 million debt inherited from its predecessor, the Zimbabwe Development Bank. “Since the inception in 2005, the bank was operating with an insolvent balance sheet which placed a huge limitation on its resource mobilisation capacity,” said Mr Chikaura. “The removal of the debt will enable the bank to realise its full growth potential for the benefit of the economy.”

He said the debt takeover, through ZAMCO has immensely strengthened the bank’s balance sheet which is now solvent with a positive equity position of $22 million, above the minimum regulatory capital of $25 million for low tier category of banks under the Reserve Bank of Zimbabwe’s capital adequacy bands. As such, the institution was now better placed to raise funding for various infrastructure projects.

“However, realising the limitation on the domestic market, the bank will be looking at external sources particularly the South African market and the diaspora,” said Mr Chikaura.