AFC Holdings says it will raise ZWL$5bn through agro-bills to finance the 2021/22 summer cropping season, Business Times can report.
In the 2020/21 cropping season, the State-owned lender raised ZWL$300m for the agricultural sector.
The beneficiaries will be selected by the bank subject to internal credit vetting processes and policies.
“The bank will continue raising agro-bills and will target raising more resources to expand financial support to the productive sectors of the economy,” Elfas Chimbera, AFC Holdings acting CEO said.
The government has identified agriculture as one of the key sectors, alongside mining and tourism, which will anchor economic recovery.
The government has restructured Agribank into a land bank.
The new model would fit the financing of subsistence and commercial farmers, as well as small-holder irrigation producers.
The bank is expected to finance agricultural development projects and will enable farmers, especially small-scale farmers, who have been struggling to borrow from banks due to lack of security of tenure and title deeds.
Banks have also been shunning the 99-year leases as collateral, arguing that they were not transferable, in the event that a farmer borrows money and failed to repay.
The smallholder farmers are expected to benefit from the Land Bank through leasing machinery from its equipment leasing unit.
In its financial results for the six months to June 30, 2021, AFC Holdings reported a profit of ZWL$334m from ZWL$43m reported in the prior comparative period, largely due to a marked growth in loan book, fees, and commissions income.
The loan book grew to ZWL$4.7bn during the reviewed period from ZWL$2.3bn recorded in the prior comparative period, reflective an expansion in support of the productive sectors in the economy, mainly agriculture.
“The bank increases its participation in the agricultural sector on the back of good rainfall season, resulting in a tremendous growth of the loan book, especially for small-scale farmers in the tobacco and sugarcane sectors.
“The bank took a conservative forward-looking approach on impairment and prudently increased the impairment allowance on financial assets,” Chimbera said.
He added: “The reviews of fees and bank charges at the end of the prior year 2020 supported the non-funded revenue streams of the business. However, this was inadequate to compensate for the Covid-19 induced reduction in transaction volumes, Chimbera said.
Net interest income amounted to ZWL$791m in the reviewed period from ZWL$203m reported in the prior comparative period.
Total assets stood at ZWL$11.7bn from ZWL$11.2bn reported in the same period in 2020.
Non-performing loans were at 0.82% as of June 30, 2021.
Deposits from customers increased 36% during the reviewed period to ZWL$5.5bn