BancABC unveils P220m agriculture funding
Brian Benza | Wednesday April 9, 2014 11:21
Following an agreement with the Africa Agriculture and Trade Investment Fund (AATIF), lending to the agricultural sector would be increased at the bank’s operating bases - Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.
According to the chief operating officer of BancABC, Francis Dzanya, the agreement with AATIF would see US$25 million made available by the Fund for lending through BancABC subsidiaries to a wide range of participants in the agricultural sector.
“The mission of the AATIF is to help Africans maximise the potential of the continent’s agricultural production, manufacturing, service provision and trade activities for the benefit of the poor.
By making loan capital available the Fund aims to help stimulate agricultural output, production levels and add value across the entire chain of agricultural activities. Knowledge and skills transfer is a major focus that is promoted through AATIF support for contract farming operations,” Dzanya said.
According to figures released by Statistics Botswana recently, the agriculture sector was the second lowest contributor, after water and electricity, to Gross Domestic Product (GDP) at 2.3 percent.
The economy of Botswana has historically been agriculturally based, until 1967 when diamonds were discovered although the sector has been identified as one of the areas that have a great potential to diversify the economy and create employment, especially in rural areas.
The chairman of AATIF Thomas Duve added that risk sharing would allow BancABC to increasingly step into transactions along the entire agricultural value chain ideally with longer term funding and fair collateral policies.
“BancABC will manage the entire credit assessment and lending relationship with beneficiaries, while sharing the risk equally with the AATIF. The agreement between the two institutions was natural and offered benefits for both parties,” Dzanya added.
The Africa Agriculture and Trade Investment Fund (AATIF) is a public-private partnership founded in August 2011 and dedicated to uplift Africa’s agricultural potential for the benefit of the poor.
It targets small, medium and large-scale farmers as well as agricultural businesses along the entire value chain that will be financed either directly or indirectly through financial institutions such as BancABC.
ABC Holdings is currently the subject of a P2.3 billion takeover by Atlas Mara a company backed by former Barclays plc chief Bob Diamond and Ashish Thakkar, Africa’s youngest billionaire.
Having realised that the Botswana financial market typically serves the higher end of the Small and Medium Enterprises (SME), BancABC recently developed a value proposition that is concentrated on the smaller end of the spectrum.
In partnership with the International Finance Corporation, the bank launched an SMME targeted product, which considers business with a turnover of between P0 and P10 million as SMEs.
At the launch of the bank’s SME value proposition recently, BancABC Botswana managing director, Jitto Kurian said it was important for the bank to provide support to SMEs.