CBZ Holdings is in talks with the African Development Bank (AfDB) to raise funding for agriculture as Zimbabwe’s biggest banking group by deposits expands its tentacles in the sector.
The group has a unit, Agro Yield, which is the biggest private sector funder in agriculture.
CBZ group CEO Blessing Mudavanhu met AfDB officials on the sidelines of the intra-African trade in Durban last week where discussions on agriculture funding took place.
“It [AfDB] is another important multilateral which we have been trying to court for them to expand activities. We are still in preliminary discussion stages but we thing we can present something along agriculture, capacitating our agricultural platform in Zimbabwe. We still need some funding,” Mudavanhu told Business Times.
“We have agreed in principle that we will have follow up discussions. Of course we can do other things outside agriculture but the way we have organised ourselves in agriculture through Agro Yield, they also like the story they have been hearing. We have a platform now that can attract appropriate funding to better improve what we are trying do with farmers.”
Experts say government has no resources to fund agriculture alone. The private sector has to step in and the resources meant for agriculture could be deployed to other sectors such as infrastructure, experts say.
“If the private sector comes in, agriculture will be taken as a business and the era of waiting for government handouts will be gone,” an expert said.
CBZ has plunged into the agriculture sector at a time a number of financial institutions have been sitting on the fence on the back of the absence of security of tenure as they have disregarded the 99-year leases as collateral.
Early this month, Lands, Agriculture, Fisheries, Water and Rural Development minister Anxious Masuka released the securitised A2 model settlement permits which will replace the old offer letter. It has also issued updated conditions for the issuance of the permit indicating government expectations and obligations of the beneficiaries of the land reform programme.
In its financial results for the half year ended June 30 financial results, CBZ’s gross loans and advances amounted to ZWL$51 865 087,000. Of that, the agriculture sector accounted for 61% up from 55% as at December 31, 2020.
CBZ has been on the prowl for facilities for on lending to the sectors of the economy. Last week, CBZ signed a US$28m trade finance facility with Afreximbank in which CBZ Bank on lend to customer in the trade side of business with a focus on foreign currency earners.
In its financial results for the half year ended June 30, CBZ Holdings recorded profit after tax of ZWL$2.43bn from ZWL$3.76bn recorded in the same period last year.
Total assets grew to ZWL$146bn from ZWL$121bn in the same period last year. Deposits rose to ZWL$100bn from ZWL$93bn in the same period last year with the bulk coming from corporates.
The group still enjoys the bulk of its income from the non-funded side. In the period under review, non-interest income constituted 80% of the total income down from 88.8% in the comparable period last year.