US$30m horticulture revolving fund launched Professor Mthuli Ncube

Business Editor

GOVERNMENT has officially launched the US$30 million Horticulture Export Revolving Fund aimed at capacitating local farmers in boosting production and tackling challenges related to unavailability and lack of access to appropriately structured financing for short to long-term expenditures.

The fund will also close the funding gap in the value addition and beneficiation of fresh produce, which has resulted in horticultural value-chain margins being unsustainably squeezed.

It will be accessed through normal banking channels from participating financial institutions where eligible export horticulture applicants/intended beneficiaries are required to submit their requests with the requisite information.

Finance and Economic Development Minister, Professor Mthuli Ncube, presided over the launch of the fund in Harare yesterday where he stressed the need to grow the agriculture sector as a major economic driver.

Increasing agricultural production through value addition and beneficiation is in line with the National Development Strategy 1 (2021-2025), whose main objective is to structurally transform Zimbabwe’s economy from one highly dependent on the export of agricultural raw materials to an economy trading in high value processed goods.

According to the Horticulture Development Council (HDC), the sector employs 18 700 people and has potential to double jobs in the next four years.

Under the Horticulture Recovery and Growth Plan, the sector is projected to contribute export earnings of US$300 million per year, at least by 2030, up from an estimated US$77 million.

“To this end, the setting up of a US$30 million Horticulture Export Revolving Fund (HERF) in line with the 2022 National Budget Statement on the SDR allocation, will go a long way in empowering our farmers to start horticulture projects as well as acquire value addition facilities that will enable dehydrating, freezing, canning, bottling, extracting, juicing and concentrating their produce,” said Prof Ncube.

“It was in the 2022 National Budget Statement that I announced that Zimbabwe had been allocated US$958 million by the International Monetary Fund (IMF), as part of a general allocation of US$650 billion that was released globally to all IMF member countries. 

“It is from these resources that Treasury is targeting strategic sectors such as horticulture expansion and value addition, a sector that has potential to generate foreign currency earnings and create jobs that will have a multiplier effect in growing the economy.”

Prof Ncube said the Horticulture Export Revolving Fund has the potential to close the funding gap and spearhead increased productivity, as well as finance bankable projects with a focus on value addition. Such strategic deployment of resources, he added, will ensure that Zimbabwe’s Vision 2030 remains on course as the country targets an upper middle-income society.

“Through the risk sharing and co-financing model, banking institutions shall conduct their normal credit assessments and due diligence,” said Prof Ncube.

“To this end the Government, Reserve Bank of Zimbabwe, FBC Bank, NMB Bank, CABS Bank and the AFC Land and Development Bank have signed the Memorandum of Agreement and Term Sheet for the Horticulture Export Revolving Fund.”

Reserve Bank of Zimbabwe (RBZ)

The minister directed participating banks to start processing applications from players keen to access funding and invited other entities who want to participate to come on board. As a revolving fund, Prof Ncube said Government expects beneficiaries to repay the loans so that other farmers may also benefit. 

“Government and the participating banks will closely work together to ensure viability and sustainability of the fund through efficient allocation and recovery programmes,” he said.

Zimbabwe is geared to restore its position as one of the leading horticultural exporting countries in the region having been among Africa’s traditional major exporters of horticultural products, alongside Kenya and Ethiopia for most of the late 1980s up to the early 2000s. 

According to the Horticultural Development Council of Zimbabwe, the country’s horticultural exports increased from only US$6 million in the 1987/88 season, to US$103 million by 1997. 

The exports grew by an annual average rate of 25 percent for the period 1998 to 2004 peaking at above US$250 million by the early 2000s.

Until the late 1990s the sector contributed 3,5 to 4,5 percent of the national Gross Domestic Product and was a major foreign exchange earner for the country with diverse exports of horticultural products including tropical, citrus and deciduous fruits, various vegetables, tree nuts, avocados and cut flowers to European markets. The sector used contributed over US$125 million in export earnings at its peak in 2000.

In line with the 2022 National Budget Statement, Prof insisted that the SDR disbursements of US$145 million will be channelled toward priority sectors such as social investments (health US$35m and education (US$10m), agriculture support (export revolving fund US$30 million) as cash guarantee to banks and smallholder farmer irrigation schemes (US$20m), industry support (retooling/revolving fund), housing development (US$10m) and gold centres (US$10m).

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