CABS to plough over ZWL$150m into agric

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 LIVINGSTONE MARUFU

Old Mutual Zimbabwe’s banking subsidiary, CABS, is planning to in­vest over ZWL$152m in the forth­coming 2019/2020 summer crop­ping season in an effort to improve productivity in the agriculture sector.

The development comes at a time when the country is grappling with foreign payment backlogs of agricul­ture-related products due to subdued agricultural production, hence fund­ing the most critical sector will help in turning around the economy.

Simon Hammond, CABS manag­ing director, told Business Times that the bank and cut foreign currency deficits which rose from raw material importation.

“Last year, we supported agricul­ture to the tune of ZWL$152m and we hope to support it to such levels again this year. We will be giving loans to anyone who qualifies, not specifically large-scale farmers only. We’ve got a good project with Ton­gaat Hulett sugarcane outgrowers go­ing on in the Lowveld,” Hammond said.

He said CABS “works through off-takers who then decide to subcon­tract to the surrounding small-scale farmers rather than lending them di­rectly to individuals. We have direct­ed a lot of lending to the productive sector, we remain the largest lender to the private sector of all the banks in the country.”

CABS’ thrust is to fund the whole farming value chain to improve pro­ductivity on A1 and A2 farms.

The bank’s support for smallholder farmers is in tandem with the Reserve Bank of Zimbabwe’s aspirations for financial inclusion aimed at embrac­ing unbanked societies.

In most instances, the bank ad­vances additional fees for other farm­ing activities which include horticul­ture, wheat, maize, piggery, poultry, soya, cotton, dairy and beef produc­tion.

Though it is not clear as to how much money banks will set aside, early indications show that over ZWL$2bn will be mobilised for the upcoming agriculture season.

CABS recorded a profit growth of 195%, worth ZWL$61.1m in the half year ended 30 June, up from ZWL$20.7m in the previous com­parable period due to the growth in net interest income, foreign currency translation gains, and property fair value gains.

Funds under management for the asset management business were up by 139% to ZWL$6.8bn attributable to positive investment performance.

The group’s operating and admin­istration expenses were up 76% to ZWL$80.1m, from ZWL$45.5m previously due to inflationary pres­sures and the impact of local currency devaluation.

Meanwhile, the diversified finan­cial services provider Old Mutual Zimbabwe’s revenue for the half year to 30 June 2019 jumped 741% to ZWL$2.4bn, from ZWL$290.7m.

Old Mutual has become the first company in the country to imple­ment historical cost accounting in view of the high inflation that has been prevailing in the country.

Historical cost is a measure of val­ue used in accounting in which the value of an asset on the balance sheet is recorded at its original cost when acquired by the company.

Old Mutual Zimbabwe adopted historical cost accounting after its parent company, the South African-based Old Mutual Group, recently announced that it had “ring-fenced” its Zimbabwe operation in view of inflationary pressures affecting Zim­babwe.

The parent company said finan­cials from Old Mutual Zimbabwe had been removed from the group’s results from operations and adjusted headline earnings.

The group credited the increase in revenues to “growth in all main rev­enue lines, particularly investment returns and exchange gains.”

Profit before tax rose 671% from ZWL$66m last year to ZWL$509.2m on investment returns.

Operating profit — excluding in­vestment returns from excess share­holder funds invested and gains di­rectly attributable to policyholders, increased by 287% to ZWL$132.9m, fromZWL$34.3m driven by profit growth in the life, banking, short-term insurance, and asset manage­ment businesses.