Zimbabwe's new farmers need working capital support, says banker

Agricultural financing schemes from financial institutions have failed to revive Zimbabwe's struggling agricultural sector and boost output because of the unavailability of working capital to new farmers, a senior banking executive has said.

Zimbabwe Allied Banking Group (ZABG) managing director, Emmanuel Tagarira, told a workshop on "Financing Leasehold Agriculture" in Harare that financial institutions should seriously consider availing working capital to A2 (newly resettled commercial) farmers.

"No provision was made in the financing schemes for daily cash requirements," Tagarira told the agrarian experts at the meeting, organised by the African Institute for Agrarian Studies. "How can you expect a farmer to work all year round only to get cash 12 months down the line and still produce? Although they are given fertilisers, pesticides, seed and other inputs, how are they expected to apply the fertilisers without working capital?" he asked, going on to suggest that this was one reason many of them sold the inputs to those better equipped to farm.

Zimbabwe has put in place a number of support mechanisms to help new commercial farmers who have taken over farms previously owned by white farmers. The Reserve Bank of Zimbabwe has availed the Agricultural Sector Productivity Enhancement Facility, accessed by A2 farmers at a concessionary interest rate. Other financial lifelines have been channelled through Agribank, while other banks have also devoted significant financial resources towards agricultural production.

But output has dropped significantly since 2000 when the government embarked on its controversial land reform programme. According to Commercial Farmers Union (CFU) figures, national output levels reached a peak in 2000 with a total of 4,54,340 tonnes of output. But by 2006, output in both commercial and communal agricultural sectors had dropped to 2,551,970 tonnes, representing a 43.8 percent decline.

Tagarira said apart from provision of working capital, government should put in place incentives for exporting farmers to retain more than 60 percent of their foreign currency. "This facility can be used by farmers to expand their operations through the purchase of capital equipment," he said.

Financial Gazette