Golden Sibanda : Senior Business Reporter
BANKS should come up with innovative and creative products suitable for smallholder farmers to access the $37 million funding facility that has been earmarked for agriculture, the Zimbabwe Agricultural Development Trust said. ZADT chief executive Mr Godfrey Chinoera said banks need to come up with financial products that are tailor made for smallholder farmers, who often have no conventional collateral required by banks when they need to borrow, but are seen as future drivers of the economy.
The farmers encounter a series of bottlenecks, terms and conditions, arduous and lengthy procedural requirements normally applied to ordinary borrowers, which they cannot meet when they approach banks for support.
Mr Chinoera said that there was need to deliberately craft products to suit the needs and profile of small rural farmers amid many constraints constricting lending by banks.
The ZADT CEO was speaking on the sidelines of a meeting to facilitate dialogue between banks and private sector for information sharing.
The agriculture sector used to be the mainstay of the economy accounting for between 11 percent and 19 percent of the country’s gross domestic product, generating over 60 percent of national foreign exchange earnings, but suffered considerably in the last decade and half. Mr Chinoera said that innovative financial products from banks also need to look at issues that resulted from the land reform, which include the lack of adequate farming experience among the small resettled farmers.
“We are calling on our (banking) partners to ‘say we have the finances, can you be creative enough and also respond to the needs of the farmers’.
The product we have provided is finance, with conditions that being development oriented finance, it must target this set of groups.
“Within this set of groups are things that need to be promoted, but we also realise that some of the requirements for these farmers are not being met by financial institutions, so we want banks to take this creativity in context, we are not saying they are not creative at all, but we are saying that we all need to respond.
“The financial services sector needs to be creative in terms of product development and we also need to respond in terms of understanding the needs of the financial services sector to be able to play a role in terms of the objectives that we want to achieve,” Mr Chinoera said.
“The development sector is responding and trying to respond by providing financing to go towards supporting smallholder farmers.
“Being development institutions, we carry a development agenda, which is also related to issues of financial inclusion to see that the funding benefits farmers right at the bottom of value chains,” he said.
“As such, the terms and conditions of these finances would be such that the financial services have to target these rural communities and for banks to qualify (to get the funds) the development institutions would like to see that, indeed, as they lend they are including the poor groups and with these challenges, the financial services sector needs to move and respond by coming up with products and facilities targeted at smallholder farmers.”
Mr Chinoera said that the need to support smallholder farmers is critically important in that such initiatives are in sync with objectives set out in the Zimbabwe Agenda for Sustainable Socio-economic Transformation spanning 2014 /18. ZADT is a non-profit oriented organisation run by a trust formed by The Humanist Institute for Cooperation with Developing Countries and SNV Netherlands Development Organisation.