CBZ Agro Yield calls for long-term capital injection into agriculture
CBZ Agro Yield chief executive, Simbarashe Mhungu, has called for a significant injection of long-term capital into Zimbabwe’s agriculture sector to drive sustainable growth and development.
Speaking at a recent event to unpack the 2024/25 agricultural summer plan, Mhungu emphasised the critical role of institutional investors in providing the necessary financial muscle to transform the sector.
“When we contribute towards our pension…contributions, our insurance contributions, that institutional money anywhere else in the world is the only one that can match funding in agriculture because it is long-term money,” said Mhandu.
CBZ Agri-Yield was formed as a joint venture between the Government and CBZ Holdings to de-risk the agriculture ecosystem to ensure that the country has food security for the prolonged period of time.
Mhungu argued long-term nature of these investments aligns perfectly with the sector’s need for patient capital to fund projects such as dam construction and infrastructure development.
“I think the real interest in order to transform our industry is to see whether we can give farmers money for five years, 10 years, 20 years, to build dams, to raise dam walls, to build real core infrastructure that is needed,” he said.
Mhungu further explained that such investments would be mutually beneficial, as they offer a stable and potentially high-return avenue for institutional investors.
“Infrastructure and agriculture are the two industries where that can happen,” he stated.
Mhungu urged policymakers to create an enabling environment to attract long-term capital into the sector.
“I am going to implore our policy makers, policy formulators, to see what can be done in order to attract long-term money into agriculture,” he said.
Commenting on Mhungu’s remarks, agricultural analysts said focusing on long-term investments and comprehensive support services aligns with the broader need for a paradigm shift in agricultural financing.
They suggested that pension funds could diversify their portfolios and potentially yield higher long-term returns by considering investments in agriculture.
Traditionally, focused on equities and properties, these financial institutions may find agriculture to be a lucrative and impactful investment avenue. By channelling funds into this sector, pension funds can contribute to national food security, rural development and job creation while generating substantial returns.
Knowledge sharing
Mhungu also underscored the critical need for knowledge transfer in revitalising Zimbabwe’s agriculture sector.
He also highlighted the stark contrast between local farming practices and those employed in other parts of the continent, emphasising the potential for significant yield improvements through knowledge sharing.
“I took a team of bankers to the Free State (South Africa) a few weeks ago to broaden their understanding of agriculture,” said Mhungu.
“We visited a farmer managing 22 000 hectares, achieving average yields of 8 tonnes per hectare, all through rain-fed agriculture. This is a stark contrast to our local practices.
“This farmer has been (literally) farming for 200 years. The compounding knowledge base is phenomenal. It’s about understanding the ecosystem, soil conditions, and climate. This is the kind of knowledge we need to transfer and apply locally.
“We need to find ways to impart this experiential knowledge to the next generation of farmers,” he said.-ebsinessweekl
