FINANCIAL institutions should be innovative and create products that tap into the agricultural sector, Finance minister Patrick Chinamasa said yesterday.
BY TARISAI MANDIZHA
Speaking at the Africa Regional Rural and Agricultural Finance Thematic Conference, Chinamasa said banking institutions in Zimbabwe had failed to adjust to the structural changes of the economy to create products that could tap into the agriculture sector where tobacco farmers have grown to 105 000 from the previous 2 000 before the land reform programme.
“Before the land reform programme, tobacco in our country was grown by 2 000 white farmers and after the land reform programme this crop is now grown by between 90 000 and 105 000 small-scale farmers,” Chinamasa said
“I find that our commercial banking sector has been found wanting and has not been able to adjust to this structural shift in terms of financing.
“Where the institutions were dealing with 2 000 farmers now (they) are being called to deal with 105 000 farmers and they don’t seem to know what to do.”
Chinamasa said he had met banking executives where he urged them “to come to terms with the reality in coming up with innovative finance models for the small-scale farmers”.
A number of new farmers have been battling to get financing from banks as they do not have the security to lodge with financial institutions.
Banks are still to accept 99-year leases as title deeds following government’s failure to bring closure on the land reform programme.
Chinamasa said the major drivers of development of the agriculture sector were access to technology, access to inputs, seeds, chemicals, fertilisers and labour, among others, adding that he dreamt of a “day when our financial institutions (would) develop tailor-made products for our rural and smallholder farmers”.
“Providing finance is a necessary, but not sufficient condition for sustainable rural and agricultural sector development,” Chinamasa said.
Speaking at the same event, Reserve Bank of Zimbabwe governor John Mangudya said agriculture remained the main source of the economy and it supported 70% of the population.
“It is critical that agriculture is backed by very strong and sound financial systems to provide support to the agriculture sector,” Mangudya said in a speech read on his behalf by RBZ deputy governor Kupukile Mlambo.
“We realise that all of the challenges that our banking sector has been facing are a high level of nonperforming loans and we are trying hard to clear it up.”