Rebranding the Agribank to AFC, and the revival of Zimbabwe Farming

By Calvin Manika

Zimbabwe heads to another agricultural season starting November. With economic challenges most of the farmers say they cannot afford to buy inputs and other equipment due to lack of capital resources. In recent years, capital funds remain a challenge to many communal farmers.

Ndumiso Ndlovu, a farmer in Nyamandlovu, Matabeleland North, centres his hopes on the revived Agribank, now operating as the AFC bank. He believes that the rebranded bank will give more opportunities and financial support to farmers.

“Of late many banks are providing loan facilities to farmers. It is helpful depending on the type of farming investment. But we look forward to the AFC to do more as the bank is meant for us farmers and I hope that the products they have introduced are handy to our situation,” said Ndlovu.

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According to the Food and Agricultural Organisation (FAO) the demand for food will increase by 70% by 2050; at least $80 billion annual investments will be needed to meet this demand. Agriculture finance has been cited as a tool to empower poor farmers to increase their wealth and facilitates the development of food value chains for feeding 9 billion people by 2050.

Prior to the launch of the rebranded Agribank, Executive Director for retail banking and agricultural development Francis Macheka said there was need of a development bank to cater for small farmers.

“When you have a development bank, you are able to structure facilities that are suitable for even the smallest farmer at the grassroots level rather than just a bank that is only responsible for large scale commercial farming and this is why government is very adamant that we need to have this bank established and start operations by 30 March 2022,” said Macheka.

This year, Agribank successfully re-branded to Land and Agricultural Development Bank of Zimbabwe.

“Land Bank is considered to be a development finance institution. We have small holder farmers here who might not be considered by commercial banks. The Land Bank will be tolerant to development work. In other words, there are a lot of things that banks ask for when they want to finance people and some of them – small farmers might not meet the requirements,” said Macheka.

The Agricultural Finance Company (AFC) Holdings, is a financial institution with four subsidiaries; AFC Commercial Bank, AFC Insurance, AFC Land and Development Bank, and AFC Leasing Company. According to the government, the institution is aimed at providing funding across the whole agriculture value chain from communal to large-scale farmers with Treasury having injected ZW$700million into the firm.

AFC Commercial Bank Limited, is incorporated under the Companies & Other Business Entities Act (Chapter 24:31) and is registered as a commercial bank. According to the AFC statement, the Bank’s main business is provision of retail banking services, discounting bills, treasury services and bridging finance and agricultural related loans.

This publication learnt that, the bank will train officers who will advise farmers as well as assist them in market development and there will be a leasing unit that will be complimentary to the bank that will lease equipment to smallholder farmers.

A financial analyst at the leading financial research firm Eben Mabunda said it makes no difference in undertaking a mere rebranding exercise of the same underperforming state-owned bank without a real capital injection.

“Without additional real investment and the termination of the 99-year leases, the change of name does not translate to a new era for the bank per se. A solid value proposition is also mandatory in the insurance space where the institution has shown interests, a sector that requires solid capitalisation and a sound reinsurance backing. Without doubt, this would allow, not just the AFC but other banks to extend credit to local farmers, leveraging on the land as security,” said Mabunda.

AFC said the bank, essentially, the Bank will continue operating as a commercial bank with all of Agribank’s existing relationships, facilities and products.

“Our clients will not be required to open new accounts, but will continue using their existing accounts. Implicitly, the transformation from Agribank to AFC Commercial Bank will not disrupt any current operations, but will result in enhanced commercial banking services to our customers,” said AFC in a public statement.

Some of the new products opened are the AFC Leasing Company to offer agriculture equipment leasing services and mechanisation to farmers. The Leasing Company seeks to capacitate farmers to increase their production and productivity by enhancing their operational efficiency through availing mechanised equipment.

“Company’s main mandate is to improve agricultural production and productivity by offering affordable agricultural equipment for hire. Productivity is also a key focus which will ultimately increase yields for farmers. Leasing Company has, available for hire, combine harvesters, tractors and planters received under the government-initiated Belarus and John Deere mechanisation facilities,” said AFC.

Another product, AFC Insurance Company has been established to provide comprehensive agriculture insurance products as well as general insurance products. One of the major advantages being offered by the Insurance Company is risk mitigation for the Group Companies, in terms of default cover for the lending companies and asset protection for the leasing company.

“AFC Insurance Company Ltd will capitalise on the bank’s experience to mobilise a pool of customers from private as well as public institutions as these are related services.

Some of the products to be offered under the products to be offered by the insurance company include: Crop Insurance, including weather index insurance, Short Term Insurance, micro insurance for farmers, among others,” adds the statement.

The Bank evolved from the Land and Agricultural Bank (LAB) of 1924 of the then Government of Southern Rhodesia, to the Agricultural Finance Corporation (AFC) which was established in 1971 to Agricultural Bank of Zimbabwe Limited, trading as Agribank in 2000. And now the Agricultural Finance Company (AFC) Holdings.


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