The Sunday Mail
Lands and Rural Resettlement Minister Dr Douglas Mombeshora and Secretary for Finance and Economic Development Mr Willard Manungo believe banks should be doing more for farmers.
In particular, they want better support for small-scale farmers.
This is normal, considering that smallholders have for decades been the guarantors of food security, with commercial farmers largely focusing on cash crops such as cotton and tobacco.
Land reforms have resulted in a seismic shift in production patterns, and smallholders are now not only responsible for safeguarding household food security but also — as was seen in the recent tobacco marketing season — a significant proportion of cash crops as well.
At the same time, without discounting the immense importance of mining, agriculture is a crucial pillar of economic transformation, growth and development.
Naturally this means protecting and promoting the interests of smallholders should be of paramount importance to Government and the private sector.
As such, the recent introduction of new A1 permits is a step in the right direction.
But there are fears that the new permits might not be acceptable to banks as collateral, especially seeing as financial institutions often say the fact that the State retains permanent title to the land makes such documents ultimately unbankable. Government has the legitimate position that transferability of land between creditors and debtors could reverse land reforms, while banks say they need collateral. But something has got to give, the stand-off cannot continue.
Dr Mombeshora and Mr Manungo say banks must start looking at the viability of project proposals as a form of collateral.
The history of agri-banking in Zimbabwe back into Rhodesian times has shown that financial institutions, when willing, can support production through cash and project implementation expertise.
Banks cannot continue to cry that deposit levels are low and yet they are excluding some 200 000 potential clients by demanding a title deed that is simply not there.
Financial institutions must adapt if they want to thrive, and they must adapt if they are serious about national economic development.
And it is not only about banks.
Farmers must show resourcefulness and willingness to succeed.
Mr Justice Muchati, a skills and capacity development programme officer with Ruzivo Trust, in March this year published a paper on this issue titled, “Prioritising financing of the agricultural sector towards realising Zimbabwe’s new economic thrust under Zim-Asset”.
He said financing would largely have “to be underpinned by farmers’ own resources; contract farming must be promoted, now that there is a regulatory instrument that can foster better relations; bank funding arrangements (are) key, which means that Government and financial institutions must sit and discuss the gridlock and negotiate what suits both parties; research and development must be boosted, so that farmers increase yields per hectare; farmers must be made aware that they can be competitive even on lower land units depending on how they manage their enterprises; those who cannot use all the land must free up, and surrender to Government to give to others on the waiting list”.
Because of the relatively high costs of production in Zimbabwe in comparison to the region, Mr Muchati suggests private-public community partnerships which ensure “farmers are supported by inputs and they get guaranteed market for the produce”.
“We have noted a serious misunderstanding of banks and other private players on the current dynamics of the agriculture sector. Mistrust is very high, and banks rarely feature on the ground to see what the state of agriculture looks like.
“In some cases, decisions are being made in offices, of simply rejecting smallholder farmers finance applications without just and fair assessments, no feedback, when farmers make efforts.
“. . .Some bankers claiming 20 years of working in finance institutions, miss the point that the agrarian situation out there has changed, and it will not revert to the old systems, where a few controlled most of the resources. Rather the obtaining agrarian situation, that perhaps they were not totally schooled in, is what banks need to understand better and work with.
“While we urge banks to reform and look beyond the past, the Government should adopt policies and programmes should embrace the investment by the private players in the agricultural sector.”
Editorial Comment: Where there is a will…
The Sunday Mail
Lands and Rural Resettlement Minister Dr Douglas Mombeshora and Secretary for Finance and Economic Development Mr Willard Manungo believe banks should be doing more for farmers.
In particular, they want better support for small-scale farmers.
This is normal, considering that smallholders have for decades been the guarantors of food security, with commercial farmers largely focusing on cash crops such as cotton and tobacco.
Land reforms have resulted in a seismic shift in production patterns, and smallholders are now not only responsible for safeguarding household food security but also — as was seen in the recent tobacco marketing season — a significant proportion of cash crops as well.
At the same time, without discounting the immense importance of mining, agriculture is a crucial pillar of economic transformation, growth and development.
Naturally this means protecting and promoting the interests of smallholders should be of paramount importance to Government and the private sector.
As such, the recent introduction of new A1 permits is a step in the right direction.
But there are fears that the new permits might not be acceptable to banks as collateral, especially seeing as financial institutions often say the fact that the State retains permanent title to the land makes such documents ultimately unbankable. Government has the legitimate position that transferability of land between creditors and debtors could reverse land reforms, while banks say they need collateral. But something has got to give, the stand-off cannot continue.
Dr Mombeshora and Mr Manungo say banks must start looking at the viability of project proposals as a form of collateral.
The history of agri-banking in Zimbabwe back into Rhodesian times has shown that financial institutions, when willing, can support production through cash and project implementation expertise.
Banks cannot continue to cry that deposit levels are low and yet they are excluding some 200 000 potential clients by demanding a title deed that is simply not there.
Financial institutions must adapt if they want to thrive, and they must adapt if they are serious about national economic development.
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And it is not only about banks.
Farmers must show resourcefulness and willingness to succeed.
Mr Justice Muchati, a skills and capacity development programme officer with Ruzivo Trust, in March this year published a paper on this issue titled, “Prioritising financing of the agricultural sector towards realising Zimbabwe’s new economic thrust under Zim-Asset”.
He said financing would largely have “to be underpinned by farmers’ own resources; contract farming must be promoted, now that there is a regulatory instrument that can foster better relations; bank funding arrangements (are) key, which means that Government and financial institutions must sit and discuss the gridlock and negotiate what suits both parties; research and development must be boosted, so that farmers increase yields per hectare; farmers must be made aware that they can be competitive even on lower land units depending on how they manage their enterprises; those who cannot use all the land must free up, and surrender to Government to give to others on the waiting list”.
Because of the relatively high costs of production in Zimbabwe in comparison to the region, Mr Muchati suggests private-public community partnerships which ensure “farmers are supported by inputs and they get guaranteed market for the produce”.
“We have noted a serious misunderstanding of banks and other private players on the current dynamics of the agriculture sector. Mistrust is very high, and banks rarely feature on the ground to see what the state of agriculture looks like.
“In some cases, decisions are being made in offices, of simply rejecting smallholder farmers finance applications without just and fair assessments, no feedback, when farmers make efforts.
“. . .Some bankers claiming 20 years of working in finance institutions, miss the point that the agrarian situation out there has changed, and it will not revert to the old systems, where a few controlled most of the resources. Rather the obtaining agrarian situation, that perhaps they were not totally schooled in, is what banks need to understand better and work with.
“While we urge banks to reform and look beyond the past, the Government should adopt policies and programmes should embrace the investment by the private players in the agricultural sector.”
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