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November 03, 2011

Foreign investor to take up stake in Zimbabwe's Agribank

by Gibbs Dube

The government of Zimbabwe has found a strategic partner to help recapitalize the Agricultural Banking Corporation so it can help meet the needs of  farmers seeking crop financing, said Investment Minister Tapiwa Mashakada.

Mashakada said the unidentified South African partner is expected to inject sufficient funds into Agribank, a state-controlled entity, to resolve bad debts exceeding US$80 million, mostly from unpaid loans by farmers resettled under land reform and senior government officials.

Mashakada said Agribank as in the past could play a key role in reviving agriculture. "Allowing farmers to buy equity at Agribank can be another way of ensuring that the farmers will get loans from their own entity,"

he said.

Finance minister Tendai Biti said, “Government approved the partial privatisation of Agribank, 49% of the shares are going to be sold to a partner. We are less interested in equity; the value of the 49%, but the lines of credit that would be given to farmers. We are looking at two things: the size of the shareholding and the most important thing to us is what the investor will put to the agriculture economy in the next 10 years.So you might offer us US$500 million on 49% of the shares, but if you are going to put US$20 million that’s not attractive.”

He said government was not interested in just getting money into its coffers, but to recapitalise the bank to enable it to give more loans to farmers. The partnerships are envisaged to open the windows to international capital. Biti said potential investors talking to government “are coming from South Africa, China and from elsewhere”.

Although Biti could not be drawn into revealing the identities of possible partners, Standardbusiness understands that one of them was the Industrial Development Corporation (IDC) of South Africa.IDC has a cordial relationship with Agribank.

In March, the government launched a US$30 million facility, financed by IDC to support agriculture.

Biti said he was pleased with the drawdown and that the money had been supporting not only agriculture, but agro-processing companies.

VOA, The Standard

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