| Abstract |
Agriculture in Zimbabwe provides employment and income for 60-70 percent of the population, supplies 60 percent of the raw materials required by the industrial sector and contributes 40 percent of total export earnings. Despite the high level of employment in the sector, it directly contributes only 15-19 percent to annual GDP, depending on the rainfall pattern (Government of Zimbabwe, 1995). Loans to the agriculture sector in Zimbabwe take up 19% of the total $3.8 billion availed by the banking sector since dollarization. 60% of the funds availed to the agriculture sector in the 2014/2015 season were channeled to finance tobacco farming as this is a safe haven for bankers because of the high repayment rate. (Herald, 2014; Financial Gazette, 2015). Local banks have set aside nearly $1 billion to support the 2015-16 agricultural season as Government with the bulk of the money was earmarked for strategic crops and livestock production (Zimbabwe Daily, 2015). The local banks in Zimbabwe are offering short term loans which are not sufficient for the myriad financial requirements in Agriculture (The Herald, 2015). Bankers Association of Zimbabwe President highlighted that in order to solve the limited credit to agriculture in Zimbabwe value chain finance offers an opportunity to expand financing for agriculture, improve efficiency and repayment in financing, and strengthen or consolidate linkages among participants in value chains. For financial institutions, value chain finance creates the impetus to look beyond the direct recipient of finance to better understand the competitiveness and risks in the sector as a whole and to craft products that best fit the needs of the businesses in the chain. Through financing the agriculture value chain by considering the different actors from small farmers to corporate agribusinesses, it is possible to overcome the challenges of agriculture in the country (Financial Gazette, 2015) After lifting a decade long sanctions that had been imposed on Zimbabwe, under the 11th EDF, 88 million euros has been earmarked for agriculture as the engine of economic growth. EU last year launched four projects worth 20 million dollars aimed at supporting communal irrigation schemes, development of productive small holder livestock sector as well as sustainable forest management in order to build small holder farmers' resilience to external shocks and enhance their productivity and efficiency in service delivery. However Zimbabwe's agricultural sector continues to experience severe challenges within its entire value chain, including insecure land tenure, unreliable public services, lack of access to affordable inputs and difficulties in finding appropriate agricultural financing (Africa News,2015) |
ICAR Research Data Repository for Knowledge Management