HARARE: The Infrastructure Development Bank of Zimbabwe (IDBZ) says the removal of the legacy debt on its balance sheet will give the institution the ability to access lines of credit from regional and international capital markets.
IDBZ was incapacitated by the $38,2 million legacy debt which meant the company was unable to access international capital markets.
The legacy debt was removed after the issuance of preference shares by IDBZ to government to the value of the debt assumed by the Zimbabwe Asset Management Company (Zamco).
Zamco is a special purpose vehicle set up to buy secured loans, thereby cleaning the balance sheet of banks to be able these to lend. Zamco has so far bought close to $100 million non-performing loans from six banks in the financial sector.
“The group now boasts a healthy statement of financial position with equity capital of $32,3 million as at December 31 2014 and should be able to leverage on this strength to access lines of credit from local, regional and international capital markets for deployment into key sectors of the economy,” IDBZ board chairman Willard Manungo said in a statement accompanying the bank’s 2014 annual results.
Manungo said while the $32,3 million capital was significant in the context of the local financial sector, “it is not enough in relation to the infrastructure mandate of the group”.
He said the group was open to take up of equity by new institutional investors who share its vision of infrastructure finance and development.
“A well-capitalised group with a broad institutional shareholder base will enhance its capacity to raise debt capital to fund bankable infrastructure projects in its pipeline,” Manungo said.
Government is the largest shareholder with an unassailable 87,2% equity. The Reserve Bank of Zimbabwe is a distant second with a shareholding of 12,42%.
The remainder is owned by seven shareholders that include the African Development Bank, German Investment & Development Corporation and the European Investment Bank among others.
IDBZ chief executive officer Charles Chikaura said the bank would draw down lines of credit from regional and international development finance institutions totalling $65 million.
“These resources, which will have medium to long-term maturity profiles, will be channelled to key productive sectors of the economy to meet re-tooling and other capital expenditure requirements as well as the financing of low-cost urban housing development,” Chikaura said.
The bank seeks to mobilise resources on the domestic front through issuing out bonds.
“The group plans to issue more bonds in 2015 to fund projects in housing, ICT, transport and water and sanitation sub-sectors,” he said.
IDBZ was established in 2005 as a successor organisation to the Zimbabwe Development Bank with an expanded mandate mainly focusing on infrastructure development, a key enabler in the social-economic development of the country.
IDBZ aims to be a $1 billion financial institution by statement of financial position size by 2018.
