Agribank chief executive officer, Sam Malaba

By Nyasha Chingono

ZIMBABWE’s largest agricultural bank, Agribank, says some farmers have abandoned loan repayments after government provided farming inputs through its agriculture programmes, pushing default rates up.
The government provided nearly $200 million in farm inputs under the special maize import substitution programme (command agriculture) and the presidential inputs scheme in the 2016/17 cropping season.
“The problem came when government started giving free inputs,” Agribank chief executive officer, Sam Malaba, told analysts last week at the presentation of the bank’s half year to June 30, 2017 financial results.
Government has in recent years increased input supplies in the hope that local farmers could increase production and end maize imports, for which it paid an estimated $400 million in 2016 alone.
Malaba urged government to reactivate the stop order system to guarantee repayment of loans and cushion banks from bad debts.
“We encourage our farmers who were funded under command agriculture to repay already outstanding loans. A large number of farmers owe money to banks although they have done well through command agriculture,” said Malaba.
He singled out farmers of cereal products such as maize as the major defaulters due to rampant side marketing.
“If you look at tobacco, there is limited side marketing. You are only limited to selling through the auction floors and contracts. In the sugar industry, there is also no side marketing,” Malaba said.
“For maize, we need to get the stop order facility working again so that we give confidence to banks that farmers will repay. Ultimately farmers will need to realise that the bank is lending depositors’ funds,” he added.
“We encourage these farmers to repay to ensure that when there is no command agriculture, they would have ensured that they are bankable but if they continue to have non-performing loans, they will not get anything.
During the period under review, Agribank’s net loan advances decreased by 19 percent to $80,28 million due to transfer of loans to ZAMCO.
Agriculture accounted for 19 percent of Agribank’s gross loan book at the close of the first half of 2017, down from 25 percent at the end of December 2016.
Loans to individuals make up 50 percent of the book.
The bank’s non-performing loans came down from $23 million at the end of December 2016, to $4,8 million at the end of June 2017.
Loans on the watch-list were $9 million in the first half, lower than $10 million reported at the end of last year.
“While we will increase our lending, we will also work at managing our non-performing loan book. We are also focusing on debt recovery and taking advantage of the window that was opened through ZAMCO,” said Malaba.
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