This summer cropping season, farmers who have settled previous debts with financial institutions will have access to bank loans, Bankers’ Association of Zimbabwe president Mr Luke Malaba has said. An exercise is already underway to blacklist those with high default rates in line with responsibilities of the proposed Credit Reference Bureau.

The Reserve Bank of Zimbabwe is scheduled to soon establish the Credit Reference Bureau following an upsurge of non-performing loans in the banking sector. The Bureau will compile individuals’ and corporations’ credit repayment records, court judgments and bankruptcies and submit comprehensive credit reports to lenders or creditors.

Agriculture funding has for long been a bone of contention as banks are cautious about a high number of defaulters in that sector. The financial institutions also do not recognise colateral in the form of permits and 99-year leases that are held by land reform beneficiaries.

Mr Malaba stressed: “For those who pay their loans, we will do business. Those who do not repay their loans, we will not do business. What is going to happen now is that the Credit Reference Bureau will be set up to identify bad debtors. “When you have a bad debt, you will not be able to borrow from a bank because you will be blacklisted.

‘‘When you borrow from a bank and you have a bad debt, you will not access funds. “Let us appreciate that we are operating in an economy were we have to earn money. To earn that money, we have to be exporting and be competitive. One of our main sources of money for banks is savings, but as we know, people in our economy do not have the propensity to save. Whatever we are earning, we are consuming.”

He added: “We have not cleared our arrears with the multi-lateral institutions. So, we have to clear the arrears first and renegotiate our debt with the bilateral and commercial donors. Only after we have done that can we access a significant amount of funding.

“All the money that we have is on short-term deposits and unfortunately, short-term deposits are not healthy for us to release to the agriculture sector.” On Wednesday, Mr Malaba said bad debtors will not receive special treatment while eligible farmers should prove their worth to earn special interest rates.

Borrowers with low credit risk will be charged 6 to 10 percent per annum, according to new interest policy guidelines. Moderate and high risk loans will attract 10-12 percent and 12-18 percent interest, respectively. “A farmer is a borrower like any other borrower. The rate at which you repay the loan determines your interest rates. The rate at which you borrow is determined by how you pay your loans,” Mr Malaba said.

However, Zimbabwe Commercial Farmers’ Union president Mr Wonder Chabikwa said agriculture deserves special interest rates. “In the Monetary Policy Statement, we learnt that interest rates were reduced and we believe farmers should be the ones to benefit,” he said.

“We believe that the agriculture sector, because of its strategic nature, should always attract the lowest interest rates.” Government is mobilising funds for summer cropping and has pledged to assist 300 000 vulnerable households through inputs support schemes at a cost of US$28 million.

However, self-financing farmers will be left to source alternative funding if turned away by banks. Agribank has received US$30 million capitalisation from Government to support mainly small-holder farmers. US$1, 7 billion is required to fund the 2015-16 agriculture season.