The Sunday Mail
Livingstone Marufu—
FBC Bank intends to invest US$5 million this year into agricultural value chain players to promote small-scale farmers by adding value to their products.
The move is expected to improve small-scale farmers’ capacity to generate revenue.
The fund, which will be under the Credit for Agricultural Trade and Expansion ‘CreateFund’ banner, is expected to assist all players in the value chain including farmers, wholesalers, traders and providers of raw materials.
To strengthen the execution of duties under the fund, FBC Bank has roped in the Zimbabwe Agricultural Development Trust (ZADT), which has been providing credit facilities for agro-chain players since its inception in 2010.
FBC spokesperson Ms Priscilla Sadomba told The Sunday Mail Business last week that CreateFund would be a game-changer for small-scale farmers and retailers.
“FBC Bank is dedicated to providing working capital to agricultural value chain players with strong links to small-scale farmers under the CreateFund.
“In light of the aforementioned commitment, the bank (in partnership with ZADT) will be assisting agro value chain players such as small-scale farmers, agro-dealers, traders, processors, wholesalers, contracting companies and manufacturers of farming inputs or implements, with working capital to enhance capacity,” said Ms Sadomba.
A value chain is a set of linked activities that work to add value to a product.
It consists of actors and actions that improve a product while linking commodity producers to processors and markets.
It also encompasses the flow of products, knowledge and information, finance, payments, and the social capital needed to organise producers and communities.
Value chains work best when their actors cooperate to produce higher-quality products and generate more income for all participants along the chain, as opposed to the simplest kinds of value chains, in which producers and buyers exchange only price information — often in an adversarial mode.
Ms Sadomba said value chains differ from supply chains, which refer to logistics: the transport, storage and procedural steps for getting a product from its production site to the consumer.
Starting from this year, FBC also expects to provide medium and large scale farmers with funds every season.
“For the medium to large-scale farmers, FBC Bank provides seasonal finance based on hacterage, cropping programme and expected yields,” she said.
FBC’s finance programmes also cover livestock.
The bank believes that a value chain approach in agricultural development helps identify weak points in the chain and actions to add more value.
Earlier this year, FBC partner, ZADT disbursed US$50,7 million to 172 agri-businesses through its value chain financing facility, CreateFund, since 2010.
The CreateFund is expected to improve input supplies and market access for smallholder producers of agricultural commodities, thus contributing to an increase in smallholder farmer productivity, incomes, employment opportunities and improved livelihoods of poor rural families.
Financial institutions currently selected to receive, process and disburse the CreateFund include FBC, NMB Bank, Steward Bank, BancABC, Ecobank, MBCA Bank, CABS, CBZ, Inclusive Financial Services and Collarhedge Finance.
ZADT, which was established by SNV Netherlands Development Organisation and Humanistic Institute for Development Cooperation (Hivos), has so far benefited over 100 000 smallholder farmers linked to agri-business value chain actors.
Its primary purpose is to mobilise and provide funding which will contribute to the recovery and improvement of the smallholder farming sector.
Over the years the Reserve Bank of Zimbabwe has been urging financial institutions to play a leading role in invigorating and stimulating economic growth through funding the agriculture sector.
In 2016, only 15,8 percent of total banking sector lending went to the agriculture sector, and experts believe there is room to upscale the level of support, especially in the context of value chain financing.
Agriculture contributes to 60 percent of the country’s foreign exchange earnings, approximately 15 percent of Gross Domestic Product and 23 percent of employment.
It remains a fundamental instrument for sustainable development and poverty reduction.
