Zimbabwe’s biggest lender, CBZ Holdings, has come up with a transformational lending system to the agriculture sector, which almost completely eliminates defaults on payments but also enhances the sector’s contribution to the economy.
This comes as the bank recorded a 876 percent increase in total advances to $29,4 billion during the year to December 30, 2020, with a significant chunk of these loans being channelled to agriculture.
Increased funding to agriculture is vital insofar as the sector remains the lifeblood of Zimbabwe’s economy.
Under Government’s smart agriculture funding, banks are now playing a critical role in extending loans to farmers.
In an interview with The Sunday Mail Business, CBZ chief executive officer Mr Blessing Mudavanhu said the new financing model focuses on the entire agriculture sector value chain.
“We don’t actually give money to the farmer: We give them inputs equivalent to the money they would have applied for.
“We have partnered with suppliers such as Seed Co, for example. So if you are a farmer wanting to grow maize and you need ‘x’ amount of seed, we get exactly that which suits your space,” he said.
“That also reduces the risk of people using the money for something else, so we control the whole value chain — the suppliers, the farmer and the off-taker. All those are within sight, and they are our clients one way or the other. So to have that closed loop has actually been helping in mitigating against credit risk.”
The bank’s agriculture segment — CBZ Agro Yield, which was launched in 2019 — has been coming through in this regard.
For the year ended December 30, 2020, it recorded a net profit of $299 million.
Agriculture was a key contributor to the group’s 1 893 percent growth in total income over the year under review.
CBZ chairperson Mr Marc Holtzman also told The Sunday Mail Business that the new lending system ultimately benefits the wider economy.
“This strategy is transformational as we have eliminated a lot of either corruption or risk of repayment.