The Infrastructure Development Bank of Zimbabwe (IDBZ) says it has moved to repossess assets pledged as collateral including farms across the country estimated to be worth ZWL$280m as it pounces on defaulters.
However, the lender is battling to take ownership and sell the mortgaged property.
The development comes at a time when land tenure insecurity in Zimbabwe is extremely high.
The lender confirmed it was battling legal challenges to repossess the vacant farms.
“The group, through its loan recovery efforts, foreclosed on agricultural farms in Matabeleland (provinces) with an approximate fair value of ZWL$280m.
“However, there have been severe challenges in obtaining vacant possession of the agricultural farms in Matabeleland and Mashonaland East due to circumstances beyond the group’s control, whether legal or otherwise.
“As such, no economic benefits are yet to be derived from the agricultural farms and hence, the group has not recognised these assets in the financial statements,” the company said.
However a contingent asset has been recognised in anticipation of receipt of compensation with respect to the loss of control of the land.
In its financial results for the six months to June, 30,2021, revenue for IDBZ decreased by ZWL$2.6m from ZWL$8.1m to negative ZWL$10.7m 2021, albeit with lower interest income.
Other income increased by 129% to ZWL$16.2m in the reviewed period from ZWL$7m p reported in prior comparative period.
The bank realised a net gain from its financial investments resulting in a positive movement of ZWL$7.3m, the gain is mainly attributed to the increase in the value of some of the equities securities held by the bank.
Operating expenses increased by 40%, driven by personnel expenses that increased by 18% and administration expenses shot by 66% driven mainly by inflation.
Resultantly, during the period under review, the bank recorded a loss of ZWL$272.4m compared to a loss of ZWL$268.5mn for the same period last year.
The non-performing loans ratio ended the period at 0.8%, which stands well below the regulatory threshold of 5% as debtors gained from inflation.
The bank remained committed to delivering on its mandate guided by the 2021-2023 Work Programme Theme: “Transforming and Retooling towards a DFI of Scale”.
The bank raised an equivalent of US$3.6m for project implementation and a further ZWL$100m was received in June 2021 from the government towards the bank’s capitalisation.
A rights offer targeted to raise ZWL$1.65bn is earmarked for the second half of the year and shareholder engagements in this regard are ongoing, the bank said.
During the reporting period, the bank approved private sector projects worth ZWL$144m while applications worth more than ZWL$1bn in respect of energy, mining and irrigation projects were being considered for funding.
“The growth of the loan book was negatively affected by the tight liquidity conditions and the high interest rates obtained in the market.
“Despite inflationary pressures and work disruptions due to the Covid-19 pandemic, the Bank achieved notable progress on ongoing projects,” IDBZ chief executive Thomas Zondo Sakala said.
The IDBZ was established in 2005, taking over the assets and liabilities of former Zimbabwe Development Bank. It was primarily set up as a vehicle for the promotion of economic development and growth, and improvement of the living standards of Zimbabweans through the development of infrastructure, which includes but is not limited to energy, transport, water and sanitation, information communication technology, and housing.