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April 21, 2008

Zimbabwe's Agribank disburses working capital for export horticulture, cotton

Zimbabwe's Agribank is currently in negotiations with the Eastern and Southern African Trade and Development Bank (PTA) to increase funding to farmers.

Agribank Chief Executive, Mr Sam Malaba,said that having secured US$10 million for this year, his bank is hopeful that current projects awaiting disbursement will fully utilize the funds to justify the increase.

“Discussions have already began with the P.T.A. Bank to increase the facility. The six projects which have been approved for funding are in the horticulture and cotton sectors,” he said.
Under the current disbursement, cotton projects will receive a combined US$7 million, whilst horticulture received a cumulative US$2,9 million.

“The Bank is financing export oriented concerns in the agricultural sector with a proven track record. Emphasis is placed on good past performance. The facility is for working capital only,” he said.

With uncertainty in the agriculture sector where the weather also plays an important role in the performance of farmers, he said it was too early to predict how the bank will perform.
“At this stage it is difficult to project how the Bank will perform as our performance will be critically influenced by the shareholders’ (government) ability to re-capitalize the bank, as well as the direction that the Central Bank takes with regard to monetary policy,” said Mr Malaba.

In terms of performance, Malaba said, “The proportion of bad and doubtful debts to loans and advances declined from 2.5 percent in 2006 to 1 percent in 2007. This is due to the tight controls on loan monitoring which has resulted in the bank having a good quality loan book,” he said.

He said his bank will stick with the farmers because that was its mandate.

“Agribank has a clear mandate to play a pivotal role in the funding of the agriculture sector. Agriculture is the largest contributor to Gross Domestic Product and the economic recovery of the country will be driven by the agricultural sector. Therefore, apart from the national mandate that the bank has with regard to agricultural funding, it is in our self interest to be at the centre of agricultural funding,” he said.

Sunday News

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