Banks cut agric funding

RYAN CHIGOCHE

Financial services providers, CBZ and AFC have drastically cut their financial support to the agriculture sector, a senior government official has said, amid fears the high default rate was spooking banks.

Addressing journalists at a post Cabinet briefing on Tuesday this week, Information minister, Monica Mutsvangwa revealed the banks which fund farmers under the National Enhanced Agriculture Productivity Scheme (NEAPS), an agriculture financing model, have scaled down their support to farmers by 62%.

“Under NEAPS, both AFC Commercial Bank and CBZ have commenced registering farmers, with inputs being available. The targets for support by the two financial institutions have been revised downwards. CBZ is now targeting to support a total of 60 000 hectares, with 55 000 hectares under maize and 5 000 hectares under soya beans, while AFC Commercial Bank is targeting 30 000 hectares, comprising of maize (25 000 hectares), soya beans (3 000 hectares), and traditional grains (2 000 hectares),’’ Mutsvangwa said.

Under NEAPS, banks then recoup their money through government guarantees under this collaboration, placing pressure on the fiscus to reimburse banks that would have used their money to support farmers.

The reduction in the banks support to farmers comes after CBZ Agro-Yield said in September it was rejecting loan applications guaranteed by the government.

According to official data from the Ministry of Finance and Economic Development, ZWL$5bn was recovered out of a possible ZWL$22bn disbursed last year to maize farmers.

CBZ AgroYield CEO, Walter Chigodora, told a recent pre harvest wheat conference that wheat farmers had a better loan repayment rate at 77%.

The government had come with a plan that those with no collateral must get government guarantee so that everyone could go and farm, he said.

“But we now have a problem. The government which is supposed to give the guarantee is sanctioned and its resources are constrained. As a result, the government is not paying the guarantees,” Chigodora said.