Published by the government of Zimbabwe
Martin Kadzere
29 August 2005
Harare — ABOUT 60 percent of farmers who accessed Government agricultural loans under various schemes during the 2004/05 agricultural season have failed to repay, threatening the continuity of the facility.
This has made it difficult for various agro-lending institutions to finance new applications and could hamstring the Government's efforts to finance agricultural activities to achieve food self-sufficiency.
The Agricultural and Development Bank (Agribank), Tobacco Industry and Marketing Board, Grain Marketing Board and Cold Storage Company are among agro institutions which have been lending to farmers at an annual interest rate of 50 percent, now reduced to 20 percent.
Besides being afforded this rare opportunity to borrow at concessionary rates and without collateral, farmers have failed to meet their side of the bargain.
Participants who attended the National Economic Consultative Forum last week emphasised the need for agricultural loans to be accessed by farmers committed to production.
They also expressed concern at the slow rate at which the loans are being repaid.
With only a month away from the beginning of the 2005/06 farming season, concerns have been raised whether new farmers who failed to honour their obligations could be able to access new loans.
The latest developments are certain to have far-reaching effects to the revival of the sector, which has been accorded priority by the Government and the Reserve Bank of Zimbabwe in terms of funding.
Food importation this year is expected to gobble millions of dollars in foreign currency as the country failed to produce enough grain during the last farming season.
Although the entire Southern African region was affected by drought, inadequate commitment to production by new farmers who benefited from agrarian reform had also impacted negatively on the production of the staple maize crop.
The majority of farmers applied for loans for rehabilitation of irrigation infrastructure but this did not translate into increased production.
It is also understood that some farmers, instead of channelling the funds to agriculture, diverted the funds to non-farming activities, taking advantage of the absence of collateral security on loans.
About 90 percent of applications by farmers for loans have been turned down by various commercial banks and farmers have been quick to lay the blame on banks for being too stringent in their requirements.
However, it has since emerged that some of the biggest challenges to farmers in their bid to acquire concessionary funds are lack of understanding of application procedures and poor track records.
It emerged last week that only $950 billion out of a projected $7 trillion had so far been disbursed by commercial banks on behalf of the Reserve Bank largely because most applicants did not understand the application procedures.
Poor track records have also seen banks exercise extreme caution before disbursement, in light of threats by the central bank to debit their accounts in the event of default by the farmers.
Although the granting of loans is no longer based on a farmer's ability to provide collateral, banks have tightened their appraisal systems to ensure the money ends up in the right hands and for the intended purposes.
That state of affairs has, consequently, created its own complexities as fears heighten that the next farming season could be negatively affected.
Questions are also being asked why production has continued to go down while the RBZ and the Government are working tirelessly to made available critical inputs and funding to farmers.
It has since been suggested strict measures be put in place to speed up loans disbursement while ensuring risk management systems throughout the evaluation, monitoring and controlling process are not compromised.
Government set aside $150 billion for the 2004/05 agricultural season.
Under the scheme, $20 billion was advanced to fund tobacco production, $60 billion for maize and $20 billion each for irrigation, livestock and for maize production.
A whopping $7 trillion has been set aside for the 2005/06 season.
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