Calls for new agric funding model
THE Livestock and Meat Advisory Council (LMAC) says the credit guarantee facility to support agriculture largely by rural farmers has failed to deliver the desired results on the back of a host of issues.
Speaking at a three-day Zimbabwe Economic Development Conference which ends today in Victoria Falls, LMAC chief executive officer Dr Reneth Mano yesterday said bankers were unwilling to lend to rural farmers.
“When we talk to bankers to say why are you not lending to agriculture, they will mention these three components to say that agriculture is very risky, we don’t have the expertise.
“The money that they have is not structured in a way that will work for agriculture (the type of farmer that you want to lend to) and that we don’t know how to de-risk the front line or its too costly for us to do it as bankers,” he said.
Agriculture is one of the major mainstays of the economy.
In light of the above issues, Dr Mano said as players in the agriculture sector they were proposing the setting up of a fund management team to improve agricultural support to communal farmers.
“We are proposing that let’s establish that fund management team with a fund manager, structured under one roof with services that when combined can give you the degrees of freedom to go anywhere and offer a properly structured facility.
“I know the Ministry of Finance will say we have guaranteed the loans but in many cases from partners and agro-yield, the guarantee has failed to deliver.
“So, when a guarantee fails to deliver, it just changes the behaviour of everybody else.
“And one of the ways that I have seen changing behaviour of credit provider is that the budgets that are prepared now for agriculture financing are very big (US$2 000) budget to produce five tonnes of maize and then you hear halfway through the season that the budget did not pay for Zesa or water, so they are just pegging it to make sure that they compensate for the kind of things that they are being forced to undertake.
Dr Mano said to attract that kind of money, it was imperative to have a fund manager for that kind of agriculture investment fund or an agricultural revolving facility that is credible and has a reputation to attract pension funds into the market for them to put money.
“We have spent some time looking at exactly how Brazil is able to put money in the rural communities and increase incomes in those communities and get output out of the farmers both big and small because they are using their pension funds’ money into structuring different types of investments.
“Why are we not using NSSA money, why are we not using the pension funds when the farmers or the children that are being educated are the next payers of their premiums?”-ebusinessweekly
