Agro loans surpass $500m

BANKS have so far disbursed more than $500 million in agro loans for the 2018/19 season, the Bankers Association of Zimbabwe (BAZ) said.
In the 2017/18 season, financial institutions lent a total $1 billion to the agriculture sector.
Of the amount, tobacco farmers got $630 million, cotton growers $54,5 million, maize $100 million, soya bean producers $41 million, livestock $77 million and other crops $123 million.
In a presentation at the recently-held 2018 Agribusiness Conference, BAZ vice president Benefit Washaya said “as at May 31 2018, direct loans to agriculture accounted for 17,9 percent ($501 million) out of total commercial bank loans to the private sector of $2,793 billion”.
“Given this, banks are on course to surpass 2017/2018 farming season financing of $1 billion,” he said.
Limited financing has been the major factor affecting Zimbabwe’s agricultural sector due to grave concerns over security of tenure.
Banks argue that 99-year leases granted by government are not bankable, rendering farms dead capital  “Loans and advances to this sector typically increase during the summer cropping season (September to December) thus the 2018/2019 season will be financed well in excess of the $1 billion recorded last season,” Washaya said.
“…banks have in the past been accused of not lending to this sectors of the economy; this is far from the truth,” he said.
“Many of you will recall that banks had to offload non-performing loans of close to $1 billion to ZAMCO (Zimbabwe Asset Management Corporation); these were all supporting sectors of the economy. Because banks lend depositors’ funds, it is therefore imperative that the borrowers must be in the habit of paying back loans when they fall due,” he added.
Washaya urged farmers to take farming as a business because banks were more attracted to bankable projects.
“Banks support bankable projects and farmers are urged to take and approach farming as a business. Banks are keen to support the entire agriculture value chain from farming input suppliers, seed houses, fertiliser companies, agrochemical manufacturers and distributors up to agro-produce off takers like tobacco merchants. There are a range of products and instruments that banks will use to support the sector, ranging from loans, guarantees, overdrafts, invoice discounting, lease financing and mortgages,” he said.
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