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CBZ sets up off shore fund in Mauritius

CBZ Holdings has set up a fund in Mauritius to mobilise offshore lines of credit to finance its local projects, group chief executive officer Never Nyemudzo has said.

BY NDAMU SANDU

Nyemudzo told an analyst briefing last week that CBZ Global Fund, which was established recently, would mobilise funds for projects in power and low-cost housing among others.

“We are putting together marketing material and approaching potential investors. Once we have started marketing it, we will be able to gauge the interest of investors,” Nyemudzo said.

“It’s slightly a new kid on the block. We will make sure that it will be able to walk and run within a short space of time.”

Zimbabwe’s perceived country risk puts a premium on securing lines of credit by increasing the cost of capital whereas Mauritius has become a destination for cheap international capital.

In the outlook, the group said it would secure long-term funding for mortgage finance.

The group is working on low-cost housing projects in Gweru, Mutare and Kwekwe.

It is developing 1095 stands in Nehosho (Gweru), 284 stands in Chikanga (Mutare) and 400 stands in Kwekwe largely financed by a line of credit from Shelter Afrique.

Sale of housing units will start this month with completion of infrastructure next month. Parallel construction of units would start before the end of the month.

CBZ Holdings chief finance officer Collin Chimutsa said the group was diversifying its income streams that has seen the increase in contribution for non-banking units to 7% from 5,2% last year. He said the group’s target was 20%.

“It reduces the impact of business sector shocks and ensure sustainable earnings to our investors,” he said.

Chimutsa said the group had a healthy net interest margin of 4,30% adding that it was set to improve in the second half of the financial year on account of increased liquidity from the low -priced US$200 million bond it was in the process of finalising.

Nyemudzo said the group was unaffected by the move of the government account to the Reserve Bank of Zimbabwe (RBZ). CBZ had been holding government’s account since the use of the multicurrency regime in 2009.

In his 2014 national budget statement, Finance minister Patrick Chinamasa said the government’s account would return to RBZ.
“There was not much negative impact,” Nyemudzo said adding that the group had gained experience in dealing with government’s trading partners.

“We had time to plan for that and so far so good.”

In its latest report the International Monetary Fund said it supported the cautious and gradual approach to the transfer of the treasury account from CBZ to RBZ.

“The transfer carries implementation risk as the RBZ has not performed this function for several years, is not able to provide an overdraft facility, and its information systems are still not fully linked to the Treasury systems,” IMF said.

“Thus, it should take place only after the RBZ balance sheet has been sufficiently strengthened and its IT systems have been linked to the government’s own public financial management information system.”

IMF said there should be a sufficiently long transition period during which clear arrangements are maintained with CBZ to back-stop and cover any cash-flow gaps. Furthermore, it said, the change would require the ministry of Finance and Economic Development and RBZ’s close coordination and stronger cash management.

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