Africa Moyo Senior Business Reporter
President Emmerson Mnangagwa has challenged the banking sector to support economic revival, which has gathered pace in the last eight months, by extending loans to farmers at affordable interest rates.
The President said this on Wednesday while addressing the 6th Annual National Agribusiness Conference held concurrently with the Harare Agricultural Show.
“In our quest to grow the agriculture sector, affordable credit finance remains a major challenge as access and cost of finance are not favourable to most farmers,” said President Mnangagwa.
“May I humbly request you (bankers) to come on board? What I mean; may you make your financial service sector accessible and favourable to the current environment to make our economy grow, not introduce policies and practices that stifle that growth as a result of a desire to make maximum profits. I therefore call upon financiers to redesign their financing models with a view to make their packages accessible and affordable to our people in all sub-sectors of our economy.”
President Mnangagwa said there is a lot of money sitting in banks, but domestic investors find it difficult to access the money due to the high level of interest levied.
The high cost of money, which goes up to 25 percent despite an RBZ cap on loan interests of 12 percent, has adversely impacted on the operations of farmers and some companies.
President Mnangagwa said he is not seeking to cause banks to make losses, but “reasonable profit”.
He also encouraged beneficiaries of agro-finance schemes to honour their repayment obligations, adding that the prevalence of non-performing loans “must be a thing of the past in the Second Republic”.
“Let us, as farmers and stakeholders in the economy, embrace a culture of honesty, high ethical and honourable conduct, as we strive to uphold the Zimbabwe we all want.
“I exhort farmers across the country to treat farming as a business which should be viable.”
The Bankers Association of Zimbabwe (BAZ) says it is ready to extend loans to farmers with 99-year leases, so as to reduce demand for foreign currency, which has spiked in recent months due to economic growth.
Farmers have been complaining that they can’t access funds from banks despite reports that there is agreement between Government and banks on the bankability of 99-year leases. BAZ president Webster Rusere told a Marketers Association of Zimbabwe (MAZ) and Zimbabwe Agricultural Society (ZAS) breakfast meeting on Monday at the Harare Agricultural Show that bankers are now ready to lend on the basis of 99-year leases.
Rusere said the banking sector has $8,2 billion in deposits and $6,7 billion has already been issued as loans to various institutions and individuals.
“Commercial loans took close to $3 billion (of the $6,7 billion loans),” said Rusere.
“On 99 year leases, we are saying bring your 99-year leases and we can support you particularly on soya bean growing. The amount of foreign currency we use to import cooking oil is too much. Furniture imports are also alarming.
“We still see opportunities where we can catalyse (the) mining (sector). Why do we still import sulphuric acid when we have Zimphos? As the banking sector we are ready to partner or support the production of sulphuric acid locally.”
Bankers are keen to finance the growing of soya bean so as to reduce the quantum of foreign currency used to import crude oil used in the manufacture of cooking oil.
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has indicated that about $300 million is gobbled annually through importation of crude oil to capacitate local oil expressers.
Oil expressers have indicated that they plan to increase soya beans hectarage to 120 000 in the next four years to cut foreign currency demand.
The country requires about 300 000 tonnes of soya beans while oil expressers alone need 150 000 tonnes of soya beans per year to meet their needs.
Soya bean imports chewed $172 million from fiscus for the importation of soya beans, after farmers produced a measly 30 000 tonnes.