$50 million boost for agriculture

HARARE - The Zimbabwe Agricultural Development Trust (ZADT) has disbursed over $50 million loans to boost the country’s agriculture sector through improved efficiency and creating additional revenue streams to limit effects of market volatility.

ZADT chief executive Godfrey Chinoera said his organisation also seeks to enhance crop diversification in order to avert climate variability challenges that are becoming intense and more frequent.

“In this respect the ZADT is also focussing on the development of climate smart products to address the effects of climate change,” he said.

This was after the agriculture-focused institution, established in 2010, has so far assisted 172 agri-businesses through its value chain financing facility known as the credit for agricultural trade and expansion (Create) Fund.

The funds, disbursed through 10 local financial institutions, have benefited over 100 000 smallholder farmers linked to agri-business value chain actors.

Chinoera noted that ZADT disbursed $13,9 million in 2015 benefitting at least 42 709 smallholder farmers linked to value chain actors.

“Additionally, of the 1 038 smallholder farmers who directly accessed funds through microfinance institutions, 53 percent were women.

“However, access to finance for women and youth remains a challenge,” he said.

“Agri-businesses, small to medium enterprises (SMEs) and smallholder farmers that have received soft loans or are benefiting from the facility are provided with technical assistance support, in order to strengthen their capacities,” Chinoera added.

He noted that of those that accessed loans, there was a direct link to a positive correlation on households’ productive assets, and household incomes for both crop farmers by 19,4 percent and livestock farmers by 5,5 percent.

Reserve Bank of Zimbabwe (RBZ) director — Bank Supervision, Norman Mataruka, emphasised the need for financial institutions to play a leading role in invigorating and stimulating the growth of the economy and the agriculture sector in particular through the provision of innovative, accessible and affordable products.

“Banking sector lending to agriculture constituted 15,8 percent of total banking sector lending as at June 30, 2016. As the RBZ, we think there is scope to upscale support to the agricultural and rural sectors, especially in the context of value chain financing,” he said.

“With a value chain approach, banks can obtain a holistic view of the connections their clients have with other value chain actors and use this knowledge to offer services and tailored financial products to address and mitigate risks traditionally associated with the agricultural and rural sectors,” Mataruka added.

Agriculture contributes to 60 percent of the country’s foreign exchange earnings, approximately 15 percent of gross domestic product and 23 percent of employment.

The sector remains a fundamental instrument for sustainable development and poverty reduction.

Agriculture experts said strengthening of smallholder agricultural and rural economies through value chain financing offers an opportunity to reduce cost and risk in financing and a solution towards the financial inclusion of smallholder farmers.

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