Financiers avail $87m to agriculture sector

HARARE - Local financiers have availed about $87,5 million in agricultural funding over the past six years, with over 500 000 smallholder farmers benefiting from the funds, the Zimbabwe Agricultural Development Trust (ZADT) has said.

Godfrey Chinoera, ZADT chief executive, said since the company’s inception in 2012, the organisation had worked towards financing smallholder farmers.

“A cumulative total of $87,5 million was accessed either directly through participating finance institutions — Micro Finance Institutions (MFIs) and banks — or indirectly through Value Chain Actors (VCAs), with over 26 percent of the facility benefiting women,” Chinoera said at a recent seminar.

The revolving fund — which commenced in 2012 with seed capital of $3,8 million from donor partners, namely Danida, DFID and the Ford Foundation — has grown to $37,6 million and supports all farming activities and value chain sectors with the exception of cotton and tobacco.

“The objective of the fund is to impact the lives of smallholder farmers that are engaged in commercial activities, and see how they can be uplifted, and how they can break through barriers that keep them mostly as subsistence farmers,” the ZADT boss said.

In a presentation to delegates, Virl Micro Finance, a local financial institution that supports smallholder farmers and SME agribusinesses, noted that interest on loans to the sector which were previously as high as 17 percent per month due to various expensive sources of funds, were now accessible to farmers at interest rates as low as two percent per month through the ZADT Fund.

Loans to smallholder farmers and SMEs — who generally do not have adequate security to access funding from the commercial financial services sector — have in the past been viewed as high risk.

“However, to address such concerns, ZADT in partnership with CBZ has introduced a new de-risking intervention in the form of a structuring and risk sharing facility arrangement, which enables the bank to mobilise private funds through deposits and other lines of credit, and advance these to smallholder farmers, SMES and agricultural value chain actors,” the ZADT boss said.

During the stakeholder briefing, various presentations and discussions centred around the need for insurers and re-insurers to introduce products that target and support smallholder farmers and SME agribusinesses, with a specific need to take into account climate change and its impact on the agricultural sector.

Furthermore, the need to adequately educate farmers on policy framework and regulatory compliance, in which government should play a critical role, was suggested, with a leaning towards increasing smallholder farmer knowledge on the processes, certifications, and standards required for them to access and participate in exports markets.

Sharing statistics at the briefing, Paul Zakariya, executive director of the Zimbabwe Farmers Union, noted that Africa as a continent only contributes to three percent in agricultural global trade, one percent of which comes from southern Africa, mainly South Africa.

“Therefore in order for Zimbabwe to increase its contribution, a mind-set change is required, including a shift in the belief that smallholder farmers are high risk, with low productivity.

“This should be done by providing relevant and affordable financial products and training, to farmers, for them to maximise the yield of their land, invest in value addition ventures that provide income during off-season periods and move away from a perennial reliance on government interventions and donor bailouts,” Zakariya said.

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