'Interest rates too high for farmers'

HARARE - Zimbabwean farmers have bemoaned the high interest rates being charged by banks after the economy’s dollarisation. 

Commercial Farmers’ Union (ZCFU) president Wonder Chabikwa said the interest rates being charged by banks are stifling the growth of the agricultural sector.

He said the interest rates for agricultural loans have been ascending since the dollarisation of the country’s economy, rendering the facilities unattractive to farmers.

“Farmers are not accessing loans from banks as we can’t afford to remit. Interest rates were ranging from 10 to 18 percent and when we dollarised they went up to as high as 30 percent. This has made the loans very inaccessible. Agriculture is a primary industry, it can’t afford those high interest rates,” he said.

Chabikwa said banks need to consider reviewing their interest rates to support improved production and profitability of the agricultural industry.

“We need an agricultural bank whose loaning conditions are geared towards what used to happen in the past. We are not talking about re-inventing the wheel, let’s just flip back on pages and see what conditions were in place when agricultural production was at its best,” he said.

The ZFCU president further noted that there was a challenge for farmers intending to use land as collateral as most financial institutions preferred immovable assets in urban settings.

“In the past farmers used to put up land as collateral, nowadays the banks don’t want to use farms as collateral, they prefer using physical houses in urban areas, which is unsuitable because a house is for the family and it’s not in any way linked to business and as such farmers have been losing their houses to banks for failure to repay loans,” Chabikwa said.

He hailed government’s Command Agriculture initiative saying it was a noble idea towards capacitating farmers.

Despite drought predictions due to low rainfalls, Lands, Agriculture, Water, Climate and Rural Settlement minister Perrance Shiri told the media that government was not abandoning its agricultural plans and had mobilised required inputs for farmers.

Of late bank loans have been beyond the reach of many farmers who benefited from the controversial land distribution programme, as they do not have the land titles.

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