The Sunday Mail
MOST desperate local farmers, the majority of whom are being squeezed by the obtaining illiquid conditions on the local financial markets, are scrambling for the US$4 million Infrastructure Development Bank of Zimbabwe’s agriculture facility for the 2014/15 summer cropping season despite the stringent collateral requirements imposed.
Already, more than US$2,9 million has been disbursed since the bank announced in July that it had earmarked US$4million to finance several crops and livestock production this farming season. The IDBZ has a specialised unit focused on agriculture and over the years, different support levels have been channeled to the sector.
IDBZ chief executive officer Mr Charles Chikaura told The Sunday Mail Business that there has been a flurry of applications from farmers seeking the funds as preparations for the summer cropping season gather momentum.
“The IDBZ has been receiving and processing applications for funding for the 2014/2015 agricultural season. The applications are being processed in line with the bank’s lending criteria and the uptake is encouraging.
“Of the US$4 million budgeted for the 2014/2015 agricultural season, the bank has to date disbursed US$2,9 million and the balance of US$1,1 million is to be allocated to other various farming projects currently under funding consideration,” said Mr Chikaura.
The huge appetite for IDBZ funds has been occasioned by the tight liquidity situation prevailing in the economy, which has forced other traditional lenders such as Agribank to take a back seat.
Efforts to get a comment from Agribank chief executive officer Mr Sam Malaba were fruitless as he was not picking up his mobile phone last week.
Due to the cash crisis, financial institutions have tightened borrowing conditions after being stung by non-performing loans, which have risen from 15,9 percent as at December 31 2013 to 18,5 percent as at June 30 2014, exceeding the 5 percent international benchmark.
In a bid to mitigate NPLs, the IDBZ requires collateral from applicants in the form of immovable assets.
Farmer representative organisations have bemoaned the prohibitive collateral requirements, which most new farmers do not have. But Mr Chikaura said these conditions aee being met by prospective applicants.
“As regards the issue of collateral, the bank has not yet encountered any major challenges as the applications received have largely met our lending criteria,” he said.
IDBZ loans will cover 12 months for working capital and about 18 months for capital expenditure. However, Government has urged local financial institutions not to fund farmers on the basis of collateral, but the bankability of their projects to increase food security.
The Zimbabwe Agenda for Sustainable Socio-Economic Transformation seeks to create a self-sufficient and food surplus economy.
Finance and Economic Development secretary Mr Willard Manungo told The Sunday Mail Business recently that local banks should be at the forefront of funding local projects, including agriculture.
“We can’t have a situation where banks outside the country are willing to support Zimbabwean projects at a time when our own banks are taking a back seat.
“What we want as the Government is for the banking system to support all productive sectors, including agriculture.
“If you overemphasise collateral, we are not going to make much progress because the biggest collateral is the viability of the project, not so much what somebody puts on the table by way of either real estate or some other collateral; it’s really the viability of the project . . . so as Government we want all farmers to be supported by the banking sector,” said Mr Manungo.
The Bankers Association of Zimbabwe recently announced that it was considering the possibility of accepting 99-year leases and settlement permits as collateral.
Lands and Rural Resettlement Minister Dr Douglas Mombeshora urged banks to accept the tenure documents extended to farmers. He accused financial institutions of denying new farmers funds when they are funding “white farmers who do not have title to the land”.
