eBusiness Weekly
Martin Kadzere
The Zimbabwe Asset Management Company (Zamco) is hoping to conclude five deals with investors seeking to take over bad debts that the State-owned asset firm took over from banks to help restore viability in the financial sector since 2015, an official said.
Zamco, a special purpose vehicle created by the Reserve Bank of Zimbabwe acquired non-performing loans from companies that had potential to start generating healthy cash flows and showed capacity for profitability once their corrosive NPLs were acquired.
Cosmas Kanhai, chief executive of Zamco said five potential investors were looking at buying the debt or injecting capital in some of the firms.
“The investors are doing due diligence and we are hoping that during the first half, the deals will materialise,” Kanhai said.
“Two investors are looking at buying debts, which they will convert into equity while three others are looking at injecting fresh capital.
“These will then negotiate for longer debt repayment periods.”
Kanhai said of the five investors, one was targeting a mining firm while the remainder were looking at agro-processors.
“We also have a number of investors who have shown interest but are monitoring macro-economic developments particularly issues related with currency.”
Zamco was formed in 2015 with a 10 year mandate to rid the banking sector of all non-performing loans after, which the special purpose vehicle is anticipated to wind down its operations.
Zamco will give all bad loans a moratorium of eight years and NPLs that will fail to perform within the grace period will then be foreclosed through takeover of the security pledged against them.
Zimbabwe avoided a major bank lending catastrophe after over $1 billion worth of the non-performing loans were shipped to the Zamco. The RBZ had noted with concern that NPLs, which reached a peak of 18 percent in September 2014, causing banks to scale down on new loans, which had potential to weigh on economic growth.
Last year, the Government suspended the acquisition of non-performing loans by Zamco as part of measures to contain the country’s domestic debt.
Finance and Economic Development Minister Mthuli Ncube, said the flooding of the Government securities posed a risk to the macro-economic stability as a result of money supply growth.
Some of the companies whose bad loans were acquired by Zamco include Cotton Company of Zimbabwe, RioZim, Star Africa, Cairns Foods, Hwange Colliery Company Limited, Border Timbers and the Cold Storage Company.
