MPs unimpressed with Agribank privatisation plan

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THE government will offload 49 percent of its holdings in the Agricultural Development Bank of Zimbabwe (Agribank) by year end through privatisation, an official said on Tuesday.
The privatisation is expected to help recapitalise the institution which urgently requires a $50 million cash injection.
Responding to questions from the parliamentary portfolio committee on lands and agriculture, acting permanent secretary Pfungwa Kunaka attributed the delay in privatising the bank to a shortage of funds.
He said a technical committee was established in 2012 to oversee the process while financial and legal advisors were engaged.
“With guidance from Cabinet, by year end we should have identified a partner who will come on board. It’s a process but we have covered some ground,” he said.
Kunaka said government was yet to evaluate the offers that have been received and to invite other interested partners to invest in the bank.
Agribank, is currently capitalised to the tune of $23 million.
The committee demanded a clear strategy from the finance ministry on how the bank would be recapitalised, pointing out that the two-year delay in completing the process was hindering the development of the agriculture sector.
Kunaka said finance minister, Patrick Chinamasa would soon appraise Cabinet on progress and seek further support for the process.
The privatisation would leave government with a controlling stake of 51 percent under the empowerment law, he said.
The committee chairperson David Butau, legislator for Mbire constituency, questioned how the proposed partner could drive the bank forward without control.
“If you bring in a private equity partner they would want to make sure that their investment sweats for them,” he said.
The MPs said no investor would part with $50 million for an asset that was worth $23 million without claiming full ownership.
MP for Bindura North, Kenneth Musanhi said if Agribank was overvalued, there were other banks that required capitalisation which investors could choose.
“That person would not be stupid enough to invest in Agribank where he is asked to pay a premium. What will stop that person from buying shares in Barclays, Standard Chartered or any other bank?” he said.Advertisement

Butau gave the ministry officials a week to come up with a clear privatisation strategy.
“On one hand you are looking for investors to come into Agribank and on the other you are not ready to tell us what value you are placing Agribank at as a private asset?” asked Butau.
In response, Kunaka said the value would be determined jointly with the new partner.
“We don’t want stories of due diligence that take two years,” Butau retorted.
“Obviously this thing is not happening very quickly. We need a solution that gives us a quick turnaround. We want you to go back to your offices and bring a solution to this committee.
“We don’t think what you are discussing today is a solution, it’s an academic process to a solution. Go and work on a solution, have as many meetings as you can with Agribank.”