THE Zimbabwe Agricultural Development Trust (ZADT) has so far disbursed a total of $87,5 million to agri-businesses through micro-finance institutions (MFIs) and banks, officials say.
By Freeman Makopa
The fund, which started in 2012 with a seed capital of $3,8 million from donour partners — Danish International Development Agency (Danida), the United Kingdom’s Department for International Development (DFID) and the Ford Foundation, has grown to $37,6 million and supports all farming activities and value-chain sectors, with the exception of cotton and tobacco.
Speaking at a stakeholders’ briefing held recently in Harare, ZADT chief executive Godfrey Chinoera said the fund is meant to uplift the lives of smallholder farmers that are engaged in commercial activities.
“The objective of the fund is to impact the lives of smallholder farmers that are engaged in commercial activities, and see how they can be uplifted, and how they can break through barriers that keep them mostly as subsistence farmers,” he said.
A local financial institution, Virl Micro Finance, that supports smallholder farmers and SME agribusinesses, said interest on loans to the sector, which were previously as high as 17% per month due to expensive sources of funds, were now accessible to farmers at interest rates as low as 2% per month through the ZADT fund.
Loans to smallholder farmers and SMEs, who generally do not have adequate security to access funding from the commercial financial services sector, have in the past been viewed as high risk.
However, to address such concerns, ZADT, in partnership with CBZ, has introduced a new de-risking intervention in the form of a structuring and risk sharing facility arrangement, which enables the bank to mobilise private funds through deposits and other lines of credit, and advance these to smallholder farmers, SMES and agricultural value-chain actors.
Zimbabwe Farmers Union executive director Paul Zakariya pointed out that the country needed to implement an inclusive strategy in order to increase its contribution.
“Africa, as a continent, only contributes to 3% in agricultural global trade, 1% of which comes from Southern Africa, mainly South Africa. Therefore, in order for Zimbabwe to increase its contribution, a mind-set change is required, including a shift in the belief that smallholder farmers are small farmers with a high risk and low productivity.
Therefore, an inclusive strategy should be developed and adopted, that trains small holder farmers to operate and compete as “private entities”, whilst contributing to public and private sectors, and international markets”, he said.