eBusiness Weekly
Business Writer
CBZ Holdings (CBZ) is working towards weaning itself from a Government guaranteed agriculture loan book as it believes it now has the knowledge and expertise to navigate the sector on its own.
Through its CBZ Agro Yield unit, CBZ provides probably the biggest chunk of funding to the agriculture sector.
The bank extends loans for the growing of maize, wheat and soyabean as the major crops.
Overall, the bank’s loan book is made up of $32,3 billion or 51 percent advances to the agriculture sector.
But of that loan book, $25 billion is supported by Government guarantees as collateral.
The recovery rate for some of the loans have, however, been worryingly low with the bank having recovered an average 55 percent from loans extended to maize farmers.
But with a Government guarantee, the tax payer will end up saddled with the debt if the loans are not fully recovered.
CBZ, however, is not planning to continue relying on government guarantees to extend loans to the agriculture sector according to senior officials at the bank.
Responding to questions by this writer during a media briefing last week, CBZ chief financial officer, Tawanda Gumbo said the bank is planning to go it alone away from Government guarantees and has since put in place a “a lot of safeguards”.
“Government guarantee was just there to initially allow us to put in place the right levels of systems, the right levels of assessment, the correct level of technology to ensure that the programme becomes sustainable.
“So we don’t look to continue relying on a Government guarantee for long into the future because obviously into the future we know the good farmers that are great at what they do, and in fact we have been weaning ourselves gradually reducing the extend of the government guarantee and as we progress the farmers that we take on are the great farmers,” said Gumbo.
Chief executive officer, Dr Blessing Mudavanhu, revealed that focus is turning to value chain financing as a way of mitigating some of the risks associated with funding primary production.
“You will also be seeing us playing on the horticulture space using same techniques that we are using for those key crops, maize and wheat.
“You will also see us doing the same play in horticulture and other sectors, but certainly value chain financing is one of those areas that we are spearheading,” Dr Mudavanhu said.
He said the bank is also continuing to move into consumer lending.
“We are also diversifying by growing our exposure into other sectors especially the resource sector.”
The bank’s loans to the resource sector stood at 7 percent of the entire loan book of $63,9 billion, while distribution was 18 percent, private 10 percent and services 9 percent.
Meanwhile Chairman of CBZ Holdings, Marc Holtzman has described the exchange rate situation in the country as an “anomaly”.
“We view the currency situation as not the norm, but an anomaly.”
He said predictability of the currency trajectory is critical for business.
