The Sunday Mail
Livingstone Marufu
Land reform beneficiaries are closer to securing production loans as Government is finalising the envisaged Credit Reference Bureau and Collateral Register’s establishment.
There is also a plan to allocate land to foreign-based Zimbabweans to spur agro-investments, while training on farming cycles has been suggested for banks.
The register will comprise each farmer’s biometric data, helping determine his/her credit-worthiness based on productivity to eliminate corrupt elements during input support roll outs.
It is understood a good number of farmers’ information was captured when they opened bank accounts on a Reserve Bank of Zimbabwe instruction in February 2016.
These initiatives feed into the Agriculture and Rural Credit Policy, which extends banking services to rural areas, enabling small-scale farmers to circumvent credit terms like collateral.
In his latest monthly market report, RBZ Governor Dr John Mangudya said, “We need to expedite the establishment of the Credit Reference Bureau and Collateral Register for all farmers in the country, and make the information available online.
“That national register must have biometric information to rid (the system) of corruption when farmers are accessing inputs, particularly under Government programmes like the Presidential (Well-Wishers Agriculture Inputs) Scheme.
“The same goes for bankers who need training to understand the farming cycle and how to relate with smallholder farmers.
“With sufficient information regarding these farmers, banks will be in a position to increase their efforts in tailor-making products to the needs of the smallholder farmer.”
Dr Mangudya went on: “We also need to facilitate the development of agriculture Diaspora bonds to securitise remittances just like we do with the Homelink Housing Scheme.
“The same is required in agriculture to create a farming place for Diaspora people to harness foreign currency from them and investing in agriculture.
“. . . we need to create favourable macro-economic policies that facilitate growth of producer organisations that are able to enter into purchase agreements with farmers and receive financing from investors.
“Technical assistance providers and developmental partners can support the formation and management of these producer organisations while Government can institute policies that support training, management and access to markets for producer organisations.
“Typical of such schemes is when smallholder farmers who control about 90 percent of cattle take in their animals to feed lots where they are fattened for up to 90 days, then sent to an abattoir.
“In return, farmers can get a certificate underwritten by the abattoir to raise loans from banks. This would enable farmers to invest more in their farming enterprises.”
Zimbabwe Farmers’ Union executive director Mr Paul Zakaria said the strategies would improve productivity.
“We applaud RBZ Governor Dr John Mangudya for supporting small-scale farmers. This will improve productivity. Small-scale farmers co-guarantee each other on loans.
“This category of farmers is organised in groups that pay input suppliers, banks and contract workers.
“Despite such security, though, there is need to consult farmers who will use the facility, and to assess possible risks.
“We need to embrace that in our crop and livestock assessment programmes to make sure we cover all parts of the country.”
Land reform beneficiaries have been failing to access loans as banks do not recognise their 99-year leases and permits as collateral.
The farms are in State custody and banks fear defaulters might abound in the absence of title deeds.
Now, authorities are pushing the Agriculture and Rural Credit Policy which compels financial institutions to allocate at least 20 percent of lending to small-scale farmers.
Targeted outcomes include profitable and sustainable agriculture and robust agro-processing systems and related industries.
The model is similar to Nigeria’s Incentive-Based Risk System for Agriculture under which the government and banks share credit risk.
The state repays loans when farmers default and then recovers the money from culprits.
Over the years, the Nigerian government has committed US$350 million to this to encourage financial institutions to embrace agriculture.
Consequently, agro-financing increased from 0,7 percent in 2011 to 7,5 percent in 2014.
