Some observers say Finance Minister Patrick Chinamasa’s proposal in his 2016 national budget for Zimbabwe’s commercial banks to identify and fund champion farmers is unworkable.
In his budget presentation on Thursday, Chinamasa said the central bank has already pronounced its readiness to facilitate credit lines under which banks will identify committed and productive farmers.
But banker Samson Nhliziyo tells Studio 7 such financial schemes are problematic. “The money that the farmers will be borrowing that is the customers’ funds. They will definitely need to have security for it and without that they won’t be able to borrow any funds.”
He said banks are looking for an assortment of collateral for farmers seeking lines of credit to finance agricultural production.
“We are looking for mortgage bonds, title deeds and a lot of other items. There is no one who will borrow without that kind of backing. If you fail to pay we sell the property in order to recover our loans,” said Nhliziyo.
According to development worker Everson Ndlovu, bankers may have a torrid time in recovering loans from Zimbabwean farmers due to the subdued economic environment.
“They have failed to repay loans in the past and with the current harsh economic situation it will be hard for them to get loans and they repay them,” he said.
He noted that the Ministry of Finance will have to devise a way in which to recover the loans.
In his budget speech in parliament, the minister proposed the unveiling of agricultural inputs to vulnerable families.
“I propose allocation of US$28 million as input support for 300,000 vulnerable households under the 2015/16 agricultural season,” said Chinamasa.
The farmers will be given maize and small grain seed and Compound D and Ammonium Nitrate fertilizers.