Source: CBZ issues US$50m bond for agric | The Herald January 7, 2020
The country’s biggest bank by assets and deposits, CBZ Bank, is issuing a US$50 million bond that will finance the 2019/20 agriculture season.
According to the bank, the bond instruments will finance the importation of farming inputs specifically for maize and soya bean as efforts to improve production of the two essential food crops.
Agriculture financing remains one of the major challenges facing the sector that oils the Zimbabwe economy while foreign currency shortages for the importation of inputs not locally available adds to the conundrum.
Already the year 2019 was tough for the sector due to poor crop production, disease outbreaks, shortage of chemicals and high cost of inputs among others, while experts are also predicting another bad 2019/20 rain season, characterised by low rainfall patterns.
The CBZ Bond will be under the commercial contract farming programme that is being spearheaded through the CBZ Agro Yield (Pvt) Limited.
“CBZ Bank Ltd intends to issue a series of 270-day bond instruments to finance the procurement of farming inputs for maize and soya bean that are not available on the local market for the 2019/20 farming season under the commercial contract farming,” said CBZ Bank in statement this week.
“CBZ Bank thereby invites corporates and individual investors to subscribe to the CBZ Bank Series 1 — US$ 50 000 000 bond,” said the bank.
Applications must be for a minimum of US$50 000 and in multiples of US$10 000 thereafter.
The bond has an interest rate of 9,5 percent per annum and a tenor of 270 days from the first day of allotment. The offer closes on January 10, 2020 and has a Government guarantee.
According to CBZ Bank, individuals not resident in Zimbabwe must apply for exchange control approval through a bank registered in Zimbabwe while
direct applications from non-residents will not be accepted.
In the past two decades, funding for agriculture has been a challenge especially for the resettled farmers following the land redistribution programme as banks required loan applicants from the sector to provide collateral in the form of immovable assets to access funding.
There was still uncertainty on laws surrounding land tenure, which made it difficult for creditors to predict how long the farmers would be entitled to the allocated land.
Stakeholder consultations, however, saw the 99-year leases being amended to include a transferability and bankable element in order to improve access to funding for the sector.
The financial services sector has flatly declined to use the 99-year leases in their current form as collateral, leaving Government supported financial support schemes as sole sources of agriculture financing.