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Wadzanai Manyore
Over the past few years, loan repayment has been the biggest challenge for Zimbabwean farmers.
Properties and assets have been seized in an effort by lenders to recover money.
The failure by farmers to repay loans has affected the national economy. We can choose to stand in the dark and pretend that the loans we get are insignificant or we can stand in the light and see the latent ability in every input available for agricultural purposes.
It is the failure to exploit this potential which is counter-progressive – it is not the loan that is inadequate. There is a price we pay for failing to fully utilise inputs like loans. There is need to constantly measure the use of these resources against the output level. That said, how are we failing to settle our loans?
We are mercenaries when it comes to our own progress, that is why. We have become experts at sabotaging ourselves because we think so lowly of the resources that we have.
When money is borrowed, repayment is composed of:
1. Interest – this is the charge for borrowing money calculated on an annual or monthly basis; and 2. Atonement – this is repayment of the principal amount of the loan.
When farmers fail to service their loans as agreed, the amount owed simply grows. It does not disappear because we are ignoring it. When applying for a loan there are several factors to take into consideration:
1. Submit your loan application well before the season starts. Never accept a loan when the season has started because loan repayments will haunt you. Do not compromise yourself and get tempted to accept a late loan when you can longer plant;
2. Avoid using the loan for other purposes. Borrowed capital should always be used for its intended purpose. Borrow only when it is absolutely necessary and never borrow to revive a failing project unless reasons for failure have been thoroughly investigated;
3. Never falsify information as this may not only lead to prosecution by the lender but may become a major cause for default;
4. Research technical and financial information about the farming activities, e.g. profit and loss, balance sheet, and cash flows. This not only increases your chance of getting a loan, but also helps you better understand your own operations; and
5. Aim to repay the loan, e.g. a short-term loan should be repaid within one season – don’t let it spill into the next as this attracts huge interest and eats into your next harvest before you have even planted. Loan repayments should never be postponed, but if need be this should be done with the lender’s concurrence.
If a farmer adheres to these basic borrowing principles, prospects of failure are reduced.
Land is a working asset that we need to exploit fully. We all want to revive the economy and make a living out of our agricultural operations, and we must stop underestimating the potential inherent in our working assets.
Wadzanai Manyore holds a Bachelor of Science degree in Agriculture and Natural Resources. She can be reached at [email protected]
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