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Minister Patrick Chinamasa

THE Government has ploughed back a $914 000 dividend from Agribank to increase its capital base and improve its lending capacity to the farming industry.

Government, which is the sole shareholder in Agribank, was this week expected to get a $914 000 dividend from the bank which posted a $4.8 million profit in 2016.

According to ZBC News, however, it emerged after a series of closed door meetings with the bank’s directors, the State resolved to retain the dividend in the banking institution, citing the need to consolidate its turnaround strategy from losses incurred during the past few years.

Finance and Economic Development Minister Patrick Chinamasa told ZBC News that the decision not to use the dividend took into consideration the need to increase provision of low cost loans to farmers.

“Indeed, we have come up with the resolution for the benefit of the farmers as the bank is critical in unlocking production,” he was quoted as saying.

The bank’s chief executive officer Mr Sam Malaba was also quoted as saying the resolution was the main shareholder’s commitment to increase future profitability.

“They are really concerned about the need to increase profits so we really appreciate that,” he said.

The Government with a 100 percent stake in the financial concern, has also mandated the directors to continue forging ahead with a restructuring policy meant to attract capital while improving depositor confidence by focusing on productive sector lending.

Meanwhile, the Government has called on lenders to the agriculture sector to reduce their interest rates to single digit figures to promote affordability of the loans to farmers.

So far, plans are afoot to ensure the loans were accessible at reasonable rates starting from the upcoming summer cropping season with the Government already in advanced discussions with various financial institutions.

The authorities have made it mandatory for banking institutions to set aside 20 percent of loan portfolios for agriculture.

However, the funds uptake remains on the lower side mainly due to prohibitive costs and requirements like collateral. — ZBC News/ Business Chronicle