BY MELODY CHIKONO

ZIMBABWE’S ailing dairy industry requires up to US$1 billion to replace antiquated machinery at a time the sector is reeling from prohibitive lending rates.

This comes as the Zimbabwe Farmers Union (ZFU) this week warned that the country’s banks did not have the “right money” for the agricultural sector.

ZFU revealed the costs of bringing in new machinery for the viability of the sector is running into a billion US dollars at the moment.

Zimbabwe has been experiencing depreciation across the industries’ with the manufacturing industry requiring half a billion dollars to retool.

Last year monetary authorities agreed that there was need to lower the cost of borrowing in Zimbabwe to support high production in the economy with Reserve Bank of Zimbabwe Governor Dr John Mangudya saying the bank’s monetary policy committee (MPC), was looking at key economic fundamentals and would possibly look at reviewing interest rates this year.

The bank raised its policy rate to 35% from 15% in a bid to curb speculative borrowing amid surging inflation.

ZFU executive director Paul Zakaria told the Independent that high interest  rates were choking  farmers as the country was still far  behind in terms of technology especially  in the agricultural sector.

“The cost of bringing new equipment which can help us improve efficiency and improve competitiveness is prohibitive. And, we can’t rely on our financial services system because it doesn’t have the right type of money as the interest rates are too high while the tenure of the facilities is short term. There is no way we can use funds borrowed from banks. It leaves us to begin to say how can we explore other options if we have any,” Zakaria said

Zakaria said the country seriously needed to invest in new equipment but the situation had been worsened by lack of conclusive dialogue regarding land ownership in the country.

Zimbabwean banks declared that 99-year leases were unbankable and that the risk of financing farmers was too high since the land could not be used as collateral due to tenure uncertainties.