ZIMBABWE’S banking industry and other private sector players must step up efforts to finance agriculture to reduce government’s involvement in funding the industry, an expert said on Thursday.
Government has been at the forefront of funding agriculture through programmes like the presidential inputs scheme and the national enhanced productivity programme.
Food Crops Contractors Association chairman Graeme Murdoch told a Confederation of Zimbabwe Industries symposium that manufacturers require raw materials to produce and more funding was needed in agriculture.
“Reality is the banks or the private sector stepped back from funding agriculture and government had to step in from 2016 with command agriculture and of late we see there is a CBZ agro-yield to fund agriculture,” Murdoch said.
“It is important that we reverse that process and encourage the private sector to play a greater role in funding primary agriculture.
“We need to find incentives to do that. And the option will be tax incentives to support production by the private sector,” he added.
Banks have been under the spotlight since Finance ministry secretary George Guvamatanga disclosed that they were sitting on a combined US$1,7 billion in idle forex, as they avoided falling into the trap of non-performing loans.
Government last September announced a fresh plan to lure banks to fund agricultural production, with draw-downs from the International Monetary Fund special drawing rights being used to help them manage lending risk.
Finance minister Mthuli Ncube, during a webinar organised by the Zimbabwe Independent last year, said that was part of a broad agricultural sector funding strategy meant to drive growth in export focused crops.
Murdoch said there was need for financial institutions to reduce lending rates to promote agriculture.
“The reality is interest rates are becoming a major factor in the costs of production in the primary agricultural sector and there is need for us to look at mechanisms where we can manage that for genuine agricultural production.
“We also need to ensure that the high interest rates are not killing the golden goose and in this case I am referring to agriculture,” he said.
He added that it was fundamental that power becomes available to mitigate the effects of climate change through availing water for irrigation.
“Zesa (power producer) is a particularly important company when talking about driving climate change.
“I know Zesa is struggling financially, but there is an opportunity to reduce production costs, particularly by irrigating critical crops,” he said.