HARARE: Local banks are reported to be sitting on $21 million from an agriculture trust for development of small holder farmers, arguing the commission for administering the fund was “too low”. This was said by the Zimbabwe Agriculture Development Trust (ZADT), CEO Godfrey Zvinoira last week.
Zvinoira told delegates at the just ended Zimbabwe Farmers Union (ZFU) 75th Annual Congress that there was low uptake of their funding at the financial institutions by small holder farmers. He said banks were sitting on the money because it has low interest of 11, 5 percent to the farmers as compared to 18,5 percent being offered by same financial institutions.
ZADT received funding from the Danish International Development Agency (DANIDA) and Ford Foundation for the development of the agro-sector. The money is disbursed through local financial institutions for transparency and accountability.
“The banks are sitting on $21 million for small holder farmers’ development. They are opting to lend their own money which has 18, 5 percent interest. “They are saying the commission of administering the money is too low so they prefer to give farmers expensive money to make profits and stay in business,” said Zvinoira. He said in total, they have $37 million and they are stuck with $16 million in their reserves which should be disbursed this agricultural season.
Zvinoira said the challenge bedevilling the agro-sector was not about finance but there was need for capacity building of small-holder farmers in the areas of finance management.
“Besides capacity building on production, our farmers should as well be capacitated in the areas of financial literacy,” he said. He said local financial institutions also did not have adequate knowledge of agribusiness financing, saying they should be encouraged to acquire such literacy.
“Banks do not have knowledge on agribusiness financing. You find a banana farmer receiving a six months loan yet the cycle is more than that. They have a one size fits all which is a disadvantage to the farmer.
“How do you expect the farmer to pay back? At the end of the day we are moving in circles,” said Zvinoira. He however, said ZABG and Agribank were the only banks that have professionally supported agriculture over the years.
He said ZADT was also working towards empowering women and youths small holder farmers through availing some finances with low interest rates. “Women and youths are the backbone of the agro-sector and we need to support them adequately,” said Zvinoira.
