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farmers during the 2010/2011 agricultural season, amid reports that about half of the money is now available.
Sources within the bank indicated that just under US$15 million had been raised so far.
“The long-term paper failed to attract investors due to high demands on the cash flows for the first quarter as companies and interested institutions were unable to fulfil their commitments,” said the source.
ZB Financial Holdings acting executive business development manager, Mr James Hove could not disclose the amount raised, but admitted they had not met the target.
But he said funds were trickling in and they would be disbursed to farmers.
Proceeds from the 360-day paper were meant to finance the 2010/2011 summer cropping, livestock production, poultry and piggery.
“Fund raising under the Agro bills facility is a ‘tap issue’ which means we remain receptive to investors and funds are still coming in,” read part of ZB’s response to Herald Business questions.
But all the funds raised have since been disbursed to farmers and management says disbursements will continue as and when funds become available.
“As ZB, we have a list of farmers who have demonstrable farming records and robust cash flows waiting for funding, and we will ensure that the funds are disbursed as soon as they become available,” said Mr Hove.
Investment rates for the facility are on a private negotiation basis with individual investors while the lending rates to farmers are pegged at a range of not more than 18 percent as prescribed by the Ministry of Finance.
Limited support for this long-term paper also shows lack of liquidity in the market and that investors are considering long-term investment as volatile.
The paper could not be supported despite its security features that ZB Bank would take tangible security from sub-borrowers in line with the bank’s credit policy.
ZBFH is also undertaking and guaranteeing investors that they will release funds to cover the bills on maturity.
The US$30 million facility was issued under a global insurance arrangement with Credisure, NicozDiamond and Cell Insurance.
ZB Agro bills came on the market in the absence of long-term paper and this is an indication that the market is still not ready for the long-term investment due to limited cash.
Analysts say the market will continue to be dominated by short-term investments until liquidity conditions improve.
However, financial institutions in
the country are negotiating several lines of credit that would be disbursed directly
to industry at minimal rates and this is likely to improve liquidity conditions on the market.
ZB has a large agricultural book with tobacco growers constituting the largest portion.
Apart from tobacco, its clients also produce maize, soya beans, wheat, barley, sugar cane, bananas, chickens, beef and eggs.