Tight liquidity weighs on IDBZ lending

The Infrastructure Development Bank of Zimbabwe (IDBZ) says tight liquidity continues to weigh on efforts to disburse significant funding towards critical infrastructure projects.

This comes after the bank extended just US$1,75 million in the half-year to June 30, 2024, towards funding clients in the infrastructure, irrigation development, tourism, and agriculture sectors.

Chief executive officer Mr Zondo Sakala, however, said the value of disbursements was constrained by the tight liquidity in the market.

He noted that in the first half of the year, two projects worth US$2,055 million were successfully developed to bankability and approved for funding.

“The projects are Hatfield Cluster Housing (US$1,055 million) and Marlborough Residential Apartments (US$1 million).

“More projects under preparation and development are expected to reach bankability by the end of the year,” he said.

IDBZ is a Government-owned development bank in Zimbabwe, mandated to fund long- and medium-term funding for key infrastructure projects, including in the areas of transportation, housing, energy, information communication technology, water, and sanitation.

Mr Sakala said during the interim period, the bank managed to raise an equivalent of US$2,56 million towards project implementation.

He said a total of US$ 2,03 million was for the Hatfield Cluster Housing (Mabuto Villas), Marlborough Residential Apartments (Sierra Apartments), and Bulawayo Students Accommodation Complex (BSAC) to attend to post-completion snags and additional items to enhance functionality and general comfort.

During the period under review, the bank’s loan book closed the period at US$8,5 million from US$7,4 million at the beginning of the period, mainly supporting private sector operations.

In terms of capitalisation Mr Sakala said the bank received a $6 billion (ZiG 2,4 million) capital injection from the Government of Zimbabwe.

He noted that at the time of national budget approval, the amount was equivalent to US$1 million at the interbank exchange rate.

“However, when it was released, the value was eroded to US$0,18 million due to rapid exchange rate depreciation in the first quarter of 2024.

“The bank is actively engaging its shareholders for additional capital and exploring alternative capitalisation initiatives that include transfer of valuable land assets, mining claims, regular liquid capital injections through the national budget, and issuance of Treasury Bills for effectual mandate delivery,” said Mr Sakala.

During the period under review, the bank recorded an operating loss before tax of ZiG64,9 million compared to a loss of ZiG44,9 million in the same prior year period.

Net revenue for the period was a negative of ZiG3,7 million compared to a negative of ZiG19,9 million in the same period last year.

The value of assets decreased by 21 percent during the half-year period, mainly affected by adverse exchange rate movements witnessed during the first quarter of the year.

Mr Sakala said funding support towards private sector lending operations increased, which helped in the generation of income and improved liquidity.

“The bank is witnessing improved performance in the sale of its housing units and stands during the second quarter.

“Performance of sales is projected to improve in tandem with anticipated macroeconomic growth and stability,” he said.

Mr Sakala said proceeds from the sale of stands and housing units are expected to improve the bank’s performance and liquidity into the second half of the year.-herald