Zambian banks consider farmers high risk

The Zambia National Farmers Union (ZNFU) says the agriculture sector in the country is still a risky area for financial lending institutions because of the high rate of default by most farmers.

ZNFU president, Guy Robinson, says the banks in the country were unwilling to offer lower and specialised lending rates to local farmers because they had a poor repayment culture. He said there was need to strengthen dialogue among all the stakeholders to find a solution to the problem of default.

He cited the Lima and the Co-operative Banks as some of the financial institutions which where intended to cater for the specialised financial needs of local farmers but collapsed due to the high levels of default by the farmers. “Sometimes we farmers discourage the commercial banks from giving affordable finance. There are cases where a farmer borrows money to buy equipment but uses the money for other purposes,” Robinson said. “It’s not right to be dishonest, we are to blame.

The agriculture sector registered a growth rate of 2.4 per cent in 2006. Farmers contend the sector could increase its contribution to the country’s GDP if affordable finance could be made available to them.

Robinson called for strengthening of dialogue between government, financial institutions and ZNFU to find a way of mitigating the risk involved in lending to farmers. "In the past, the problem has been because the banks have not involved us when dealing with farmers. By involving ZNFU, it would help to identify genuine farmers and to ensure farmers use the fund for the intended purposes,” he said.

Robinson expressed satisfaction with the improvement the agriculture sector in the country has made recently.He said the fact that Zambia exported maize to South Africa for the first time in history was an indication of the progress the local agriculture sector was making.

Zambia Daily Mail