‘Realign agricultural loan repayments’

GREEN FARMERS are being encouraged to manage weeds in fields to encourage water retention and better soil quality.

ZAMBIA National Farmers’ Union (ZNFU) senior economist Humphrey Katotoka has urged commercial banks to realign agricultural loan repayments to the farming cycle since the 90-day defaulting period doesn’t support the growth of the industry.
Mr Katotoka said the agriculture sector is capable of providing millions of jobs to people if long term financing is accessed by the majority small-scale farmers.
“It is not correct to ask a farmer to start paying back a loan after three months when the crops are being cultivated,” he said.
Mr Katotoka said many Zambian farmers are dependent on rain-fed production and therefore tying the loan repayment to the normal financial cycle applicable to other sectors will not sustain the industry.
“Banks should develop financial products specifically for each sector. Farming is not like buying a bus, for example, that can bring immediate returns. So we want to see commercial banks realigning loan repayments to the farming cycle such that farmers can only start paying back when they have harvested. This way, default rates among farmers will reduce,” he said.
Mr Katotoka said ZNFU is implementing a Lima credit scheme with Zanaco Bank.
“The default rate is almost zero but this scheme just helps with input provision to increase yields per hectare. So the way forward is to introduce small holder farmers to mechanisation and long term financing,” he said.
A huge component of non-performing loans is attributable to the agriculture industry, with commercial banks trying to recover the monies by seizing farms and other assets that are used as collateral.

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