ZAMFI pledges to support agriculture

ZIMBABWE Association of Microfinance Institutions (ZAMFI), has pledged to support agriculture starting from next season due to its contribution to the economy.

Of the estimated $106 million loan book, agriculture is expected to get over 20 percent of the amount.

Part of the ZAMFI latest report reads: “It is undoubted that agriculture is the mainstay of our economy with strong and enduring capacity to lift many people out of poverty, especially in rural communities.

“Growth in agriculture is 11 times more effective in reducing poverty than growth in any other sector in our country.

“It is then the sector, which ZAMFIs may begin to strategically position themselves to play a critical role of providing loans and advances to small holder farmers across the country and sustainably.”

Microfinance institutions will loan an amount of close to $20 million to small holder farmers and expects to be paid back end of every season.

Most farmers especially small holder farmers have been struggling to get loans from the banks due to lack collateral, but the ZAMFIs have come to rescue farmers without any collateral.

Most ZAMFIs have reduced their interest rates to 10 percent per month to ensure the quick repayment of the loans.

Despite banks pledging $1, 1 billion to agriculture, less than $100 million have been taken so far.

ZAMFIs argued that the revival of agriculture sector will have a positive impact on their business as the sector is now productive all year round.

Though biggest loan uptakes of loans are mainly in summer, the revival of wheat and other horticultural produces will take a significant amount of loans.

Vegetables, peas and beans among other cash crops are the most grown crops in peri-urban areas.

However, ZAMFI has been impressed by the new political developments in the country and sees brighter economic prospects.

“Based on the new current developments in the country as well as economic speeches by the new Government, ZAMFI has identified a few policies, which might have an impact, positive or otherwise.

“As government has announced this to be the guiding principle for enterprise and financial markets development, it should then give hope and aspirations to ZAMFIs, that the interest rate ceiling policy, put in place last year, may be repealed in future.

“However, it should be noted that the new system of open interest determination in micro-finance sector may result in more competition,” said ZAMFI.