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Credit limits major hurdle to agro-investment

GOVERNMENT says credit constraints are still a major obstacle to agricultural investment, and this is negatively impacting on productivity.
Ministry of Agriculture permanent secretary Julius Shawa said there is need to address the credit and market challenges in the agriculture sector as it is crucial for loan guarantee schemes.
Mr Shawa said this when he appeared before the Parliamentary Committee on Economic Affairs, Energy and Labour chaired by Mazabuka Central member of Parliament Gary Nkombo.
“Credit constraints are a major barrier to agricultural investment in Zambia. Limited and unaffordable credit allocated to agriculture in Zambia is leading to many agricultural producers being credit constrained,” he said.
Mr Shawa told the committee, which was discussing the high poverty levels in the face of sustainable economic growth in Zambia, that most small-scale farmers are still facing challenges in accessing finance and this has contributed to increased poverty levels.
He said lack of adequate market is also a challenge hindering agricultural growth and rural development.
Mr Shawa said the major factor limiting farmers’ access to markets is remoteness of rural areas and dependence on middle men from urban centres.
“Lack of access to markets has led to exploitation of farmers due to information asymmetry,” he said.
Mr Shawa said institutional procurement programmes such as the Food Reserve Agency, school feeding schemes and purchase for progress programmes under the World Food Programme should be encouraged as they promote rural development by creating a market for small-scale farm produce.