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BizDay Zimbabwe

FBC seeks US$10m

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FBC HOLDINGS is negotiating for a US$10 million line of credit with an offshore investor to be repaid over 10 years, chief executive Mr John Mushayavanhu has said. The line of credit is being facilitated by Shore Cape, an international investor which recently bought 7 percent stake of the group, Mr Mushayavanhu said in an interview.

“Shore Cape is actually assisting us in mobilising lines of credit from their investment partners and, as we speak, we are talking to one of their partners who is prepared to give FBC Bank a line of credit of up to US$10 million over 10 years,” he said.

“This is a first for this country because, previously, the lines of credit we have been getting are lines that range from one year to two years, but for the first time, we are getting lenders who are prepared to lend money to this country for up to 10 years.”
Mr Mushayavanhu said the cost of the money would be less that 5 percent per annum.

Local banks have been finding it hard to mobilise long term lines of credit due to the country’s perceived high risk profile. This in turn, resulted in banks charging high interests rates (ranging between 12 and 35 percent) to the borrowers.

The prohibitive interest rates are undermining the recovery and growth of key sectors such as manufacturing and agriculture. Several local banks have also been reluctant to advance loans to corporates as a way of managing credit risks. The level of non-performing loans has been on an upward trend, from 1,8 percent in December 2009 to 13,78 percent in March 2013 with corporate being the largest defaulters.

According to the Finance Ministry, total banking sector loans and advances increased by 5,56 percent from US$3,4 billion in January 2013 to US$3,59 billion in May

Loans to individuals accounted for 22 percent of total banking sector loans as at May 31 2013, as most banks are offering salary-based loans. This was followed by services at 18 percent, manufacturing at 16 percent and agriculture at 15 percent.

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