TINASHE MAKICHI
The Zimbabwe Asset Management Corporation (Zamco) collected around ZWL$452m by June 15, 2020, but collections slowed down due to the Covid-19 pandemic as the country was put under lockdown.
In a bid to maximise on collections, Zamco has resorted to debt-asset swap
mechanisms as it seeks to recover ZWL$1.1bn nonperforming loans by 2025.
The latest mechanism being used by the corporation comes after indications that some borrowers were now using various delaying tactics
when taken to court.
Zamco chief executive Kosmas Kanhai told Business Times that the lockdown period slowed down collections but there was an improvement by the middle of May when the corporation re-opened.
“Total collections as at June 15, 2020 was ZWL$452m.
Collections had slowed down during the lockdown period and started picking up in the middle of May 2020 when we reopened,” Kanhai said.
Zamco is of the opinion that the pace of resolution in 2017 to date is above the corporation’s set targets and is also in line with international trends for resolving NPLs through asset management companies such as, Great
Wall, Orient, Cinda of China, KAMCO of Korea, IBRA of Indonesia, Danarharta of Malaysia, SAREB of Spain and BAMC of Slovenia.
In 2014, the Reserve Bank of Zimbabwe (RBZ) created Zamco to mop up NPLs to free the balance sheet of banks to be able to lend again. This
came amid fears banks would reduce lending due to rising NPLs.
Against this background, Zamco however, since inception, has been assuming mortgage bonds, non-insider loans and NPLs for companies
in good stead.
Kanhai, in 2019, dismissed the notion in the market that Zamco was formed to cushion debts which could have been mainly accumulated by politicians. This comes after there had been reports that politicians were abusing the
Zamco facility to clear their debts/loans.
He said Zamco was formed to save banks which were almost choking because of the rising NPLs and the banks were the biggest beneficiaries
of the formation of Zamco.
When ZAMCO was formed, the NPLs ratio had peaked to 22.14% in September 2014.
The Corporation is now fully focused on resolution and recovery. Notwithstanding the turbulent environment, Zamco managed to implement various strategies that maximised recovery from means other than loan
repayments such as debt asset swaps.
Analysts say the recoveries to-date are a demonstration of the fact that Zamco was not formed to simply acquire and warehouse or write-off
NPLs as all amounts acquired remain due and payable.
Zamco has powers to acquire, reschedule, dispose of, hold, manage or otherwise settle NPLs of banking institutions.
In June 2017, Zamco acquired the debts of starafricacorporation from
various banks and converted the debts into preference shares.
In March 2018, Zamco converted its preference shares into ordinary shares
effectively becoming the majority shareholder with a shareholding threshold of 58.54%.
This conversion saw Zamco now reporting as a group pending disinvestment from starafricacorporation.
