Zimbabwe’s largest bank CBZ has launched two bond issues, seeking to raise US$80,6 million to finance maize and soyabean farming, as the country faces another drought that could worsen an already dire economic situation.

The United Nations warned last week that the southern African nation faced a second successive poor harvest this year because of patchy rains, compounding problems for millions of people already grappling with last year’s drought and the worst economic crisis in a decade.

CBZ said in a notice it wanted to raise US$30,6 million to purchase seeds, fertiliser and chemicals for maize and soybean production.

The bond has a tenor of 270 days and an interest rate of between 15% and 18%.

A second dollar-denominated bond worth US$50 million with the same tenor seeks to raise money to import farming chemicals and fertilisers that are not available locally, CBZ said. The bank will pay 9,5% interest.

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Despite the current drought, agriculture remains the country’s major economic driver and is projected to expand by 5% this year on the back of projected improved rainfall trends.

But the current dry spell experienced throughout the country cast doubts of a better summer cropping season.

The country requires at least 1,8 million metric tonnes of grain for both human and livestock consumption and yet local farmers only produced just under 800 000 tonnes of grain last season.

Zimbabwe needs about 220 000 metric tonnes of soya bean annually for food, feed and industrial needs but has been failing to meet the demand, making up for the deficit with imports.

With inflation pushing the costs of inputs beyond the reach of many, self-agriculture financing remains a nightmare. Treasury allotted $1,9 billion towards agriculture this season.

Maize is the country’s staple crop, while soybeans are used in the production of cooking oil and animal feed.

Under a new government-backed programme to ensure food security, CBZ buys farm products and issues farmers with vouchers to purchase them. The bank will then recoup its money from farmers who surrender part of their harvest. The bonds are guaranteed by the government.

Zimbabwe is nearly halfway through its summer crop season, but the rains have been poor, raising concerns that the government may not meet its growth target of 3,1% this year.

Agriculture accounts for 17% of the country’s gross domestic product.

The poor rains will likely prolong the 18-hour daily power cuts as dam water levels for the biggest hydro electricity plant remain precariously low. Up to 8 million people, half Zimbabwe’s population, will require food aid this year after last year’s maize harvest fell by half, according to the United Nations. — Reuters/Fidelity Mhlanga