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 Obert Chifamba

WHEN Government announced a new financing model in which it would provide guarantees for banks to extend funding to farmers under Command Agriculture programme while it administered the rest of the programme, it sounded like it was enlisting the help of banks to recover loans from defaulting farmers. 

Government’s intention was beyond what it looked like. The writing on the wall is now bolder and clearer. Government is pushing for a scenario in which all farmers, regardless of their categories, are accorded a chance to get financial services to fund their activities, then repay later. 

And this kind of set up requires the involvement of commercial banks and the private sector, but with all the necessary indications from Government that conditions and terms for the success of the programme would be diligently met. According to a statement by the Ministry of Finance and Economic Development, Government has since partnered three banks — Agribank, CBZ Bank and Stanbic Bank. 

Done in line with the Transitional Stabilisation Programme (TSP) and the Budget Statement for 2019 the move is meant to provide cover for the production of special grains and oil seed (maize, wheat and soya beans). Additionally, the arrangement will also involve commercial banks and private sector out grower schemes, working jointly with Government on a Public Private Partnership (PPP) basis. 

It is now dawning on many that Government is seeking a long lasting solution to agricultural financing, which naturally would require an accelerated approach for financial inclusion of all farmer categories.

At this point in time, the country needs a land bank that is not only going to deal with financing farmers through loans, but would also handle critical matters such as leasing that would allow farmers to have bankable documents to enable them to secure loans from various financial institutions. 

In Brazil, for instance, where the majority of farmers are small-scale and all the land belongs to the state, they have 10-year leases that the farmers can use as collateral when borrowing, something that allows their agricultural sector to be viable as all farmers with potential to produce are doing so. Zimbabwe’s scenario is even better and more attractive than Brazil’s given that its leases are valid for 99 years, which gives them a lot of value that banks should find attractive. 

Also, the move to involve banks in the administration of the financial affairs of Government’s Command Agriculture programme will in many ways boost loans’ recovery, especially coming in the wake of defaulting concerns and threats by Government to exclude defaulters from this season’s Command Agriculture programme. It is a move that demonstrates Government’s commitment to increase accountability and nurture a sense of responsibility on the part of farmers. 

After all is said and done, a farmer producing any crop under contract is expected to do the honourable thing of returning to Caesar what belongs to Caesar after harvesting and marketing produce. It is, however, saddening to note that the majority of banks in the country at the moment view investing in agriculture as risky, and therefore, not worth the salt. And of course they have an assortment of reasons for their actions. 

The three banks — CBZ Bank, Agribank and Stanbic Bank have demonstrated flexibility when it comes to agriculture in Zimbabwe, especially in the aftermath of the Fast Track Land Reform Programme that some have blamed for the poor performance of the country’s economy after its implementation. The cooperating trio of CBZ, Agribank and Stanbic has adopted a totally different stance from the rest, and have been very supportive in the rolling out of Government’s agricultural initiatives. 

They are in fact the few institutions that still believe agriculture is a viable enterprise given the requisite support just like what used to happen in the past when the Agricultural Finance Corporation (AFC) would finance agriculture at very affordable interest rates that allowed farmers to break even after harvesting and marketing their crops. 

The bulk of the banks in Zimbabwe have remained traditional in outlook and have not adjusted nor sought to explore the new terrain that agriculture is negotiating in which there has been a monumental shift from the scenario in which large-scale commercial farmers were the only ones credited with making the economy turn through their activities, yet the small-scale, communal and even the peri-urban farmers had since time immemorial been contributing to the food security of the country, but with very limited access, if any at all, to resources. 

 It seems those banks still in the woods have not yet come to the realisation that small-scale, communal and other smallholder farmers have since commercialised their activities in a development that makes them vital players in the country’s agro-based economy and this makes them deserving candidates for funding. 

 The banks’ traditional impression of this category of farmers is that they do not have the capacity to repay loans, yet many have produced crops under contract arrangements and serviced their debts well. Recent droughts inspired by climate change have also made the situation worse, as banks fear investing in a lost cause. 

 Meanwhile, Government can also help the situation by tightening the screws on farmers defaulting repaying loans under its programmes to demonstrate its commitment to seeing the schemes succeed, which will instil confidence in private sector players willing to partner it in rolling out its programmes. 

If a Government programme will involve lending in the process, then it should also include commercial clauses consolidating the business relationship existing between Government and the borrowing farmers to inculcate a sense of responsibility and ownership among the farmers.

 In any case, no one after failing to repay a loan should expect the same creditor to extend another loan to them again before servicing the old debt.This should be the rule of thumb for farmers intending to take farming as a serious business. 

If Government is partnering commercial banks, it should also be seen to be complying to all the conditions that go with lending by pushing farmers to be responsible, and not just expect to be getting freebies without playing their part to keep the scheme alive by repaying all loans extended to them.