The Development Bank of Southern Africa (DBSA) has approved a R104,6 million or $14,6 million corporate loan to support the Cotton Company of Zimbabwe (Cottco)’s input credit scheme for small-scale cotton farmers in Zimbabwe.
Cottco, one of AICO Africa’s key strategic business units, runs the largest inputs credit scheme in the country with 127 000 growers on contract farming and 242 000 hectares under tillage and has the most extensive network of growers, infrastructure, resources, geographical reach and know-how.
Through the scheme, Cottco provides inputs such as seed, fertiliser and chemicals to contracted farmers during the growing season in accordance with the recommendation of its agronomists.
“This is a first-ever landmark investment in Zimbabwe by the DBSA,” the development bank’s group executive for International Division Admassu Tadesse said.
“Through this investment communal and small-scale farmers would have access to both credit and capacity building programmes which will empower them (farmers) to grow more cotton.The investment is in line with the bank’s mandate and strategy to support development and viable projects in key economic sectors such as agriculture.
“Moreover, the project is aligned with the government of Zimbabwe’s short-term Economic Recovery Programme, which has identified agro-processing and agriculture as key priority sectors to drive the recovery of the domestic economy.”
Tadesse said DBSA had to intervene to support Cottco as local companies were facing difficulties in accessing appropriate finance to cover their day- to- day operations as well as capital expenditure needs.
Zimbabwe’s agricultural sector has been hugely affected by the lack of access to foreign currency of both short and long-term tenors, resulting in minimal progress in terms of resuscitating the sector.
“The Zimbabwean economy is heavily dependent on agriculture, which contributes up to 17% of GDP, 60% of manufacturing inputs, 35% of foreign exchange earnings and 15% of formal employment.
“We firmly believe that the DBSA loan to Cottco, which is the dominant player in the domestic cotton industry, will go a long way towards supporting the revival of the industry, protect existing jobs in the sector and create further employment opportunities.
“And it is expected that during the buying season, Cottco will employ more than 5 000 people on average, representing about $3,6 million in wages.
“Building sustainable regional economies remain a priority area that the DBSA will aggressively pursue to ensure that the region is prosperous, integrated and progressively free of poverty and dependency.
“And we remain committed to deepen our developmental impact through expanded access to development finance,” he added.