AfrAsia upbeat about Zim
HARARE – Mautitius-based AfrAsia Bank Limited (ABL) says it remains upbeat about its investment in Zimbabwe despite the country’s fragile economy and political uncertainty.
ABL holds a 35 percent stake in financial group AfrAsia Kingdom Bank Limited (AKZL), formerly Kingdom Financial Holdings Limited, acquired last year in a $9, 5 million deal.
James Benoit, ABL’s chief executive, last week told a Mauritian publication that investing in the southern African country is probably no worse than Europe — currently facing an acute financial crisis.
“Admittedly, Zimbabwe has been through some stress but if you believe in the long-term future, now is the time to invest there,” he said. “It’s growing and getting a lot of foreign investment.
“Yes, the economy is fragile but the investor interest in Zimbabwe is amazing and undervalued,” Benoit said. Following adoption of a multi-currency system in 2009 dominated by the United States dollar most Zimbabwean firms have found the going very tough with very limited access to capital being the major challenge.
Despite the liquidity crisis, coupled with indigenisation threats, Benoit said the country’s banking regulations are very thorough with a lot of governance procedures in place.
“I obviously cannot speak for the whole country but what I can say is that we follow the guidelines and work with the reserve bank on a lot of issues.
“In a recent statement, the governor of the bank said he’s very happy with us as shareholders and about the fact that we’re keeping them informed,” he said.
Although it stabilised in the past years, Zimbabwe’s economy has remained on shaky ground with the situation being compounded by the political uncertainty over the forthcoming elections where President Robert Mugabe squares off with long-time rival Prime Minister MorganTsvangirai.
Benoit said ABL’s decision to invest in Zimbabwe — at a time when most investors have taken a wait-and-see approach — was strategic.
“It is a resource-rich country, people are educated and there’s strong entrepreneurial culture. The infrastructure, even though it’s a bit worn out, is very good.
We think that as Zimbabwe gradually normalises in terms of political perception, it will start growing rapidly,” he said.
Meanwhile, ABL’s flagship subsidiary AKZL has embarked on initiatives to strengthen the group’s businesses in response to regulatory requirements for additional capital and in preparation of an expected economic upturn, which will open new opportunities in the sector.
The group said it will launch a capital raising exercise in view of meeting the $50 million threshold set by the Reserve Bank of Zimbabwe (RBZ).
Under the initiative, AKZL will do a rights issue which will be advised by Cosmos Capital and AfrAsia Corporate Finance as corporate arrangers.
Sibusisiwe Bango, AKZL chairperson, said additional capital would ensure the group’s subsidiaries are able to support clients’ funding needs or requirements, while also enabling them to fund growth plans.
“Based on the restructuring strategies currently underway, the planned capital raising should enable the group to take advantage of existing and new growth opportunities in its key market segments,” she said. – John Kachembere