Zimbabwe’s banks and private players are owed over half a billion dollars by farmers due to inputs abuse, side marketing and poor yields, an official has said.
Tafadzwa Musarara, the Grain Millers’ Association of Zimbabwe (GMAZ) chairperson, told members of Parliament that the implementation of a robust loan recovery system is highly commendable in promoting rollover of financing of agriculture.
“Currently, banks and private players are owed more than $500 million by farmers, largely due to inputs abuse, side-marketing and poor yields. These vices must be criminalised and lengthy prison terms must be imposed to give a deterrent effect,” he said.
This comes as the agricultural sector has proved to be a strain even to government, contributing massively to a cumulative deficit.
Treasury projected the 2018 budget deficit at $2,86 billion against a target of $793 million.
Treasury allocated $989,3 million to the ministry of Agriculture.
In his budget, Finance minister Mthuli Ncube announced that promoting out grower schemes by the private sector and crowding in financial institutions will go a long way in sustaining the agricultural sector.
“Government is reviewing the financing mechanism with a view of sharing the burden between government and the private sector,” he said.
He said agriculture funding will be confined to support for vulnerable households, extension services, and research and development.
Ncube also said there was need to: “Roll out the revised 99-year lease to facilitate private sector financing to the rest of the farmers.”
The central bank announced that bankers have agreed to accept 99-year leases as collateral after government tweaked them to be transferrable and bankable.
Banks have in the past been rejecting the 99-year leases, arguing that they were not transferrable, in the event that a farmer borrowed money and failed to repay.
Farmers’ debt come at a time an estimated 90 percent of the country’s resettled farmers have failed to settle their loans with banks, with financial institutions now reluctant to lend.
“The biggest challenge that the banks face is this big animal known as Non-Performing Loans. I can say with confidence that 90 percent of our farmers that got land and are able to farm have got bad debts from one bank to another,” Agribank agriculture development executive director Francis Macheka said. DailyNews