Agricultural Development Bank of Zimbabwe has secured a US$20 million loan from Africa Export Import Bank.

STATE-controlled agro-lender, the Agricultural Development Bank of Zimbabwe (Agribank) has secured a US$20 million loan from Africa Export Import Bank (Afreximbank), the Financial Gazette’s Companies &Markets can report.
The Afreximbank facility was introduced by the Reserve Bank of Zimbabwe (RBZ)  this year to alleviate tight liquidity challenges.

The bank, whose core mandate is to fund the agriculture sector, has been battling to boost performance in the last few years owing to, among other things, low capitalisation, a liquidity crunch and rising non-performing loans.
“The bank was granted a line of credit amounting to US$20 million and as of May 2015, had drawn down US$10 million,” said chairman, Sijabuliso Biyam.

The development comes at a time when government also injected US$30 million in fresh capital into the bank, a development expected to positively impact on its future performance. Government injected fresh capital into the bank last month.
The injection allowed the bank, which recorded a US$9 million loss for the year to December 2014, to exceed the RBZ’s US$25 million minimum capital threshold. In 2013, Agribank posted a US$9,2 million loss.

The bank’s performance in the review period was hit by impairment charges which amounted to US$6,8 million as well as reduced lending due to the tight liquidity situation in the economy.
Non-interest income jumped 9,4 percent to US$12,89 million while interest income grew by nearly seven percent to US$7,38 million during the review period. Under-capitalisation had also impacted on its ability to on-lend as net loans and advances were down 15 percent to US$77 million.
The bank’s core capital stood at US$7,6 million at the end of last year. While operating costs remained fairly unchanged at US$22,9 million compared to US$22,7 million the previous year, Biyam said the bank is undertaking a restructuring exercise.
“As part of an integrated strategy for turn around, the bank has embarked on a restructuring exercise to realign business operations with a view to contain and reduce costs. The bank is streamlining its operations and realigning its structure for enhanced service delivery and efficiency gains for optimal cost. The re-alignment includes rationalisation of staff and adoption of new structure, with the entire process expected to be completed by end of June 2015,” said Biyam.