Banks extend $684m towards agric

Golden Sibanda : Senior Business Reporter

BANKS had extended a total of $684 million towards agriculture by December 2015 out of about $1 billion financial institutions had earmarked to support the sector for 2015 /16 season. Separately, micro-finance institutions chipped in with $11,4 million to support the sector by year end, the Reserve Bank of Zimbabwe said.RBZ deputy director financial inclusion, Audrey Hove said this while outlining the bank’s policy interventions to address issues of financial inclusion, especially regarding special groups such as women, youths, small holder farmers and rural areas.

She was speaking during a speed dating expo at Manna Lodge in Harare yesterday which was held to facilitate interface between banks and the private sector for mutually beneficial relations through information sharing .

Ms Hove said cognisant of the serious financial constraints due to the current state of the economy, the RBZ had directed banks to channel 20 percent of their loans to the agriculture sector.

“The Reserve Bank has directed banking institutions to ensure that at least 20 percent of their loan portfolio is comprised of loans to agriculture, as a way of supporting the key sector,” she said.

The banks earmarked about $1,2 billion for the 2015/ 16 agricultural season and remain the biggest source of funding for this sector, which requires over $2 billion support annually.

Agriculture has historically been the mainstay of Zimbabwe’s economy, contributing more than 60 percent of the country’s foreign exchange earnings and between 11 percent and 19 percent of Gross Domestic Product, depending on the rainfall pattern and international commodity prices in any particular year.

However, due to a myriad of problems affecting agriculture the sector’s contribution to national foreign exchange generation has significantly declined to an average of 23 percent.

More than 75 percent of Zimbabwe’s largely rural population derives its livelihood from agriculture.

The sector has strong forward and backward linkages, particularly with manufacturing and services.