IDC invests in Zim’s Agribank
March 24 2011 at 11:21am
The Industrial Development Corporation of South Africa (IDC) has signed a
US$30 million facility agreement with Agricultural Bank of Zimbabwe
(AgriBank), the parties said on Thursday.
The deal was arranged by SA’s Musa Capital and Zimbabwe’s Neverseez Capital
and the signing took place on March 18.
This was the first transaction of its kind since the signing of the
Bilateral Investment Promotion and Protection Act (BIPPA) between South
Africa and Zimbabwe in 2010, the statement said.
“BIPPA seeks to create favourable conditions for investment between South
Africa and Zimbabwe; provide security of tenure to South African investments
in Zimbabwe; and unlock opportunities for the Zimbabwean local industry to
access lines of credit from South Africa.
“In that context, the IDC Agribank deal is a significant step towards easing
for the Zimbabwean financial services sector the liquidity constraints
resulting from years of hyper-inflation and will, overall, assist in
boosting economic activity in Zimbabwe,” the statement added.
AgriBank said it would use the six-year term facility from the IDC to
on-lend to its blue-chip and medium-sized clients, some of which were listed
on the Zimbabwean Stock Exchange – with a focus on increasing their
production capacity.
However, US$20 million of the facility was allocated to firms who operated
in the agri-business, manufacturing, and mining sectors while US$10 million
would be on-lent to the Industrial Development Corporation of Zimbabwe.
The loan was structured to ensure that a large portion of the funding would
be used by Zimbabwean companies to purchase South African goods and
services.
“The IDC facility will, therefore, also provide revenue opportunities to
South African firms,” the parties said.
“Because it will help to induce productive capacity in several key sectors,
we see the IDC facility as a watershed transaction,” Zimbabwe’s finance
minister, Tendai Biti commented.
“It will also signal that Zimbabwe truly is open for business and that South
Africa continues to play a supportive role in Zimbabwe’s economic recovery.”
Somkhosi Malaba, CEO of Agribank, agreed that the transaction was
significant in addressing the disablement of the banking sector resulting
from the past ten years of the country’s economic history.
“Obtaining capital from sources such as the Afrieximbank, which has just
provided US$70 million to the banking sector, and from institutions like
IDC, will add momentum to the positive trend in Zimbabwe’s economic
recovery,” Malaba said.
The IDC’s divisional executive, resources sectors, Ufikile Khumalo said:
“The financial services sector plays a critical role in any economy and,
given the central role that Agribank has historically played inthe
agricultural and industrial sectors, in enterprise development, and in job
creation, IDC views this investment with optimism in respect of accelerating
the progress of the Zimbabwean economy.” – I-Net Bridge