Dr Made
Livingstone Marufu Business Reporter
GOVERNMENT has called on lenders to the agriculture sector to lower their interest rates to single digit figures as a way of making loans affordable to farmers.
Plans to borrow at “reasonable prices” are already in place starting from the next summer cropping season with Government in advanced negotiations with many financial institutions. The authorities have made it mandatory for banks to set aside 20 percent of loan portfolios for agriculture, but uptake of the funds remains low because of inhibitive costs and requirements such as collateral.
Agriculture, Mechanisation and Irrigation Development Minister Dr Joseph Made told The Herald Business that low interest rates will give farmers an opportunity to pay back loans. “We are happy with financiers of our various programmes especially the Specialised Maize Production and Import Substitution Programme, known as the Command Agriculture but there is need to review our interest rates downwards in order to make it easier to pay back the respective loans.
“Interest rates in the agriculture sector, particularly in the specialised programmes, should be at four percent to make it easier for farmers to repay what they owe to various funders. Anything above four percent interest rate won’t be sustainable for farmers as they deliver their crop in a raw state without adding any value to it.
“High (interest) rates will cripple the farmer instead of helping him. So to deal with this problem of high interest rates we have created an environment that is good for such investments,” said Dr Made.
The Reserve Bank of Zimbabwe recently directed banks to cap their lending rates at 12 percent. Farmers have always wanted Government to direct banks to reduce lending rates for farming to become a viable venture and ensure food security.
Zimbabwe Commercial Farmers Union president Mr Wonder Chabikwa said: “We have always wanted the banks to reduce their interest rates to about six percent. “But with the four percent that the Minister is proposing we will be able to get funding we have been starved of over the years due to high interest rates. “We hope the majority of our farmers will benefit from this new dispensation.”
Consequently, Command Agriculture has stimulated global interest, with the country targeting $1 billion yearly from horticulture exports to Europe. Major international companies are also keen to supply equipment, while European countries will provide $50 million for Zimbabwe’s agriculture programmes in 2017-2018 agriculture season.
Spain, The Netherlands, Italy, Turkey, Germany, France and Poland are among those countries who have pledged their support for the Command Agriculture.
Dr Made went on: “Command Agriculture has set a good precedent in that if you pay up, you gain the confidence of other businesses. The technology from these European countries is saturated, and the companies are also looking for products because they have the markets.”
“These companies are coming in with drip irrigation equipment, centre pivots and so on. Notably, they are coming to look at long-term relationships and investment. “For example, when the French companies came to Zimbabwe, they indicated that the few days they spent in the country were not enough, and they needed to return so that they would look at the entirety of the country.
“The stage where Britain would say ‘don’t go to Zimbabwe’ is now past and these companies are looking for genuine business opportunities. We welcome anyone who supports our agrarian reform. “We do business on our terms and our stance is that the real mover of productivity is not GMOs, but machinery and equipment.”
He said the harvesting of the cereal crops has gathered momentum around the country and GMB has already purchased grain bags for farmers to deliver their crop. All storage facilities are in place with the marketing board receiving many tonnes of maize that it has not received for years.
Dr Made highlighted that long season varieties and good rains have helped farmers to get very good harvest in the tune of 10 to `12 tonnes per hectare in some areas. He is expected to present the second round of crop and livestock assessment in the Cabinet in the next few weeks before making the public announcement of the real food security situation in the country.
Zimbabwe is expected to harvest more than 2,7 million tonnes of grain this year, as a result of Command Agriculture and the Presidential Well-Wishers Agricultural Inputs Support Scheme.