Senior Business Reporter
NMB Bank Limited says it will raise up to $2 billion through a private placement of a 12 month Agro Bill for onward lending to farmers for the 2021/22 agriculture season.
Agriculture is the backbone of Zimbabwe’s economy, which sustains the economic, social and political lives of the majority of the people of Zimbabwe.
The government is aiming to achieve a US$48,2 billion agriculture economy by 2025 riding on the Agriculture and Food Systems Transformation Strategy, which seeks to achieve the targeted growth by 2025.
Through various agriculture support schemes, the Government has on its side committed billions of dollars in the sector while private sector funding has also come in handy.
NMB in a circular said the $2 billion Agro Bill will support new and existing commercial farmers on its loan book for the current season.
“Targeted farmers under this transaction include commercial soya bean, maize farmers and agro-processors.
“To this end, the Issuer is inviting selected investors to subscribe for the Bills,” the bank said.
According to the circular, NMB Bank shall act as the placement agent regarding the Transaction and will distribute this Information Memorandum to a limited number of recipients for the sole purpose of assisting those recipients in deciding whether they wish to proceed to purchase the Bills.
“The issuer may increase the limit from time to time by creating additional bills in accordance with the terms of the Trust Deed,” said the Bank.
The circular highlighted that the minimum subscription amount for the bills shall be $1 million and will be issued in certificated registered form, serially numbered without interest coupons or receipts attached.
The agro-bills will have a tenure of 12 Months and a base rate of 25 percent per annum. “Month on Month inflation will be applied for repricing the bills. Interest to bill holders will be paid quarterly in arrears taking into account the base rate plus the cumulative month on month inflation for the quarter in question.”
“A ceiling of 35 percent per annum will be applicable to the investor return and all-items.”
According to NMB, the Agro Bill will offer potential investors an opportunity to diversify their portfolio composition as well as overall risk reduction. The bills will carry prescribed asset status on issue.
The Agro Bill comes at a time farmers had been calling upon government and other agro-financiers to expedite the process of financing in order to ensure farmers do not miss their planting deadlines for the 2021/22 agricultural season.
Weather experts have forecast Zimbabwe to receive normal to above-normal rains in the current season up to the last half of the 2021 -2022 cropping season – January – February – March (JMF) (2022).
Before the onset of rains, Government distributes seed and other agricultural services through programs such as Pfumvudza/Intwasa conservation scheme, Presidential Input Scheme, National Enhanced Crop Productivity Scheme (known better as Command Agriculture), more irrigation, the Livestock Growth Plan and the farm mechanisation programme, which all contribute to better harvests.
The CBZ Agro Yield has also supported farmers through input financing and distribution.
CBZ-Agro-Yield is an agricultural finance initiative for CBZ Holdings, in partnership with the Government to sponsor soya bean and maize farming.