By Kuda Chideme HARARE, June 14 (The Source) – The Insurance and Pensions Commission (IPEC) says it will go ahead with plans to float a $50 million bond aimed at financing the development of the country’s irrigation infrastructure.
Zimbabwe is on a campaign to upgrade its irrigation infrastructure after successive droughts leading to the 2016/17 season.
The southern african nation, which has an estimated 10,000 small to medium sized water bodies, only has 206,000 hectares of agricultural land under irrigation. It plans to put 2.5 million hectares under irrigation, which it says would take between 25 to 50 years and cost $10.5 billion.
“Plans to float the bond are at an advanced stage and the bond can be floated anytime from now,” IPEC commissioner Tendai Karonga told The Source.
“The response from the insurance and pensions industry has been very encouraging. To date the industry has pledged $42.28 million. Given the great support we have from the industry we foresee a situation in which we will attain our objective,” he said.
The bond, according to the term paper seen by The Source, carries a coupon rate of 6 percent and a 3-year maturity.
Agribank, CBZ Bank, and ZB Bank will disburse the instrument which has been granted Prescribed as well as Liquid asset status by the central bank.
The apex bank has, since 2009 granted prescribed status to a total of $317 million worth of instruments. For the 2016/2017 farming season, a total of $85 million was approved from different issuers.
In Zimbabwe, bonds and Treasury Bills are now seen as tools for plugging funding gaps arising from an underperforming financial sector.