Investigation: RBZ billions in debt

The RBZ absorbed loans of multi million dollar companies like Cottco, Bitumen, Rio Zim, Hwange and even a private college. The companies, who had failed to pay back the banks, have failed to pay back the RBZ, and now the central bank has been forced to start looking for investors to save the companies from sinking, together with the RBZs money

Kadoma – The Reserve Bank of Zimbabwe (RBZ)’s Zimbabwe Asset Management Corporation (Private) Limited (Zamco), is reeling under pressure to find investors after absorbing multi-million dollar Non-Performing Loans (NPLs) from the banking sector.

This development comes at a time when the RBZ has suspended four senior officials on Monday over allegations of graft. The suspended officials are Mirirai Chiremba, Norman Mataruka, Gresham Muradzikwa and Azvinandawa Saburi.

The allegations were raised by controversial politician Acie Lumumba.

Zamco, an arm of the RBZ, was established in July 2014 as part of measures to deal with problem of rising NPLs in the banking sector. It has the specific mandate of resolving the NPLs of banking institutions through their acquirement, restructuring and disposal.

In a document seen by The Mail & Telegraph dated January 2018, Zamco listed various corporations as “available investment opportunities” as it attempts to attract investors through the purchase of company equity, provision of working capital or partake in “distressed debt investments.”

The NPLs stemmed from across all sectors of the economy.

According to the document in our possession, the agro-processing sector has eight private companies in need of investment. These include, major cotton producer Cottco, sugar refinery entity Star Africa, Border Timbers and food manufacturer Cairns.

Both the State-owned Cold Storage Company and the Agricultural and Rural Development Authority are two of at least 30 cases whereby investment was sought in all three forms.

In the manufacturing sectors, State-owned Chemplex Corporation and Willowvale Mazda Motors Industry, are also listed as seeking all three forms of investment along with private companies Siemssen Maunder, Superior Holdings, Spring Products, Craitin Chemicals, Henlow Distributors, Kenrose Filters and Manpac.

Turnall Holdings is the only private manufacturing company that did not require investment in the form of equity.

In the mining sector, seven companies are listed including Rio-Zim, Hwange Colliery, Lancashire Steel and the state-owned Zimbabwe Mining Development Corporation.

In the textile industry all three companies listed, Munchville Investments, David Whitehead Textiles and Sikomwe Investments are in need of all forms of investment.

All three companies listed in the education sector are seeking debt relief, as are all five companies listed under construction and property development. These include, TLP Agencies, Bitumen Construction and the Lovemore Kurotwi owned Cornway College.

14 private companies in energy, transport, tourism and hospitality, poultry, distribution, retail and service industries are also listed, further highlighting how widespread economic challenges are in Zimbabwe.

In February this year it was reported NPLs dropped significantly to 7,08 percent at the end of 2017, compared to 20,5 percent in 2015.

Although Zamco has provided financial stability for the banking sector, it seems have contributed less to the country’s economy as a whole.

In an interview an economist who spoke on condition of anonymity, said the creation of Zamco had the unintended result of banks being weary to offer some loans to potential clients.

“Zamco did not take the unsecured debt it only took over the secured debt and that also created another problem in the sense that banks are no longer happy to take any unsecured debt in the event they need to sell to Zamco,” he said.

The economist also said Zamco would be hard pressed to find investors especially if they lacked the skill required to draw investors.

“Certainly Zamco will require investment banking experience, to look for equity partners, to look for loan partners, I doubt if they have got those skills.

“I also doubt if they have the credit assessment skills as I am not sure about how they did the taking over some of those [loans], some of them may not be credit worthy,” he said.

Referring to the companies listed as in need of investment, the economist said some business ventures were essentially incompatible to certain investment models.

“When it comes to the farms for example, how do you get an investor on someone’s farm? It is almost impossible because you would have to share a lot of things, like the infrastructure, you would be taking over outstanding [electricity] bills, water bills so that does not work,” he added.

He said Zamco had to prioritise the recovery of those companies over seeking short term gains in order to boost the Zimbabwe economy.

“They just missed the point because they are trying to maximise their profit instead of facilitating the re-opening of those businesses or even the resuscitation of those farms so as to create jobs [and] facilitate GDP growth,” he said.

Investors will only be harder to find especially with prospects being dampened by Lumumba’s accusations which have ostensibly kicked a hornet’s nest.

The fact that his allegations against the four senior RBZ official warranted action from the RBZ boss John Mangudya have highlighted the instability at the central bank.

Lumumba used the social media to attack the four and claiming they were part of a criminal “cartel” headed by an unnamed “Queen Bee.”