THE Zimbabwe Asset Management Company (Zamco) has invested nearly US$130 million in shoring up local firms and parastatals that were reeling under debt, official figures have shown.
By Bernard Mpofu
Zamco is a special purpose vehicles created by the Reserve Bank of Zimbabwe to hive off non-performing loans (NPLs) that were threatening the stability of the fragile financial institutions.
Government is committed to funding the acquisitions of NLPs in the form of Treasury Bills with a lifespan of up to 14 years.
Zamco chief executive Cosmas Kanhai told the Zimbabwe Independent that some of the high-profile companies that have to date been bailed out by Zamco include Cottco, where the government through Zamco has effectively grabbed the controlling stake of the company after injecting US$38 million.
The state-owned special purpose vehicle has also injected US$33 million in listed resources firm RioZim; US$32 million in starafricacorporation; US$20 million in Zimasco, and US$6 million in Cairns.
He said the special purpose vehicle had since establishment in 2014 absorbed non-performing loans to the tune of US$836 million, adding that it had extended facilities to some companies while in some instances it was through debt-to-equity arrangements.
Kanhai said Zamco would employ resolution options which include cash-foreclosure; restructured loans; and securities such as shares that have been issued by the special purpose vehicle as part of settlement schemes. He added that properties which are in the beneficial ownership of Zamco would also be disposed of to recover funds.
Agriculture, at 25%, accounts for the bulk of NPLs housed by Zamco; mining (16%); and manufacturing (15%). The construction industry accounts for the least of the NPLs at 2%.
Kanhai said 45% of the current stock of bad loans that were absorbed by Zamco are viable, while the remainder should be aggressively pursued before Zamco’s mandate ends in 2024.
He said Zamco was also instrumental in assisting struggling firms court strategic partners.
Official figures from the Reserve Bank of Zimbabwe show that the banking sector remained profitable during the year-ended December 31 2016, with an aggregate net profit of US$181,06 million, an increase of 42,36% from US$127,47 million reported for the corresponding period in 2015.
All operating banking institutions, according to the central bank, recorded profits during the period ended December 31 2016. The increase in profitability, according to the central bank, was largely driven by lower loan loss provisions in line with improving asset quality, lower interest expenses, as well as continued re-alignment of cost structures at most institutions.
The increase translated to an improved average return on assets and equity from 2,07% and 11,03%, to 2,26% and 12,64%, respectively.