Finance Minister Mthuli Ncube said yesterday that this was part of a broad agricultural sector funding strategy meant to drive growth in export focused crops.
He said Zimbabwe’s banking system had warmed up to government’s calls to boost the sector, which contributes about 17% to the country’s gross domestic product.
“In agriculture we want to support two areas. The first is the creation of the export revolving fund to support horticulture -floriculture, macadamia, avocados, blueberries and so forth. We will be supporting anything in horticulture that earns hard currency,” he said in a presentation to an oversubscribed economic review webinar organised by the Zimbabwe Independent, the country’s largest circulating business weekly.
Under the plan, the government will open discussions with foreign and local banks to launch credit facilities.
Government will only facilitate a seamless flow of the strategy without having to labour in scouting for funding.
“We are not going to spend money but we will structure a credit facility with some local and foreign banks. Also it’s good to work with local banks and then these banks extend lines of credit to the private sector to do what they can do best, but the risk would have been lowered through a cash cover from SDR proceeds. That revolving fund will keep going for several years,” he said.
Ncube spoke as Reserve Bank of Zimbabwe (RBZ) governor John Mangudya told the Independent recently that the country’s banking sector, under fire from authorities to help ease a blazing foreign currency crisis, had started granting US-dollar indexed overdrafts to exporters.
Banks have been under the spotlight since George Guvamatanga, permanent secretary in the Ministry of Finance, disclosed last month that they were sitting on a combined US$1,7 billion in idle forex, as they avoided falling into the trap of nonperforming loans.
“We are quite happy that the banks have taken this one positively. Some of them have started granting overdrafts in foreign currency to their clients so that they don’t cause their customers to wait for foreign currency from the Reserve Bank,” Mangudya said.
Yesterday, the Treasury boss said proceeds from the SDR would also support the development of irrigation schemes in order to climate-proof agriculture.
“In the agricultural sector, one thing that the government has worked on is to make sure that where we need to give the inputs, let us say Pfumvudza, the presidential inputs scheme programme which is a social protection programme, we have done so on time. It’s not good enough to have rains if
you are not going to provide enough inputs . . . if you are not going to climate-proof and that’s what Pfumvudza has done, to climateproof our small farmers. And this is commendable,” Ncube said.
“On commercial agriculture which is the National Enhanced Productivity programme, which is the successor to command agriculture, that again in terms of financing we are sharing with the private sector and I said right at the beginning that at the end of the day we want agriculture financing shared with the private sector. That’s what has happened. So we see progress where farmers go to banks to structure their own loans. Also we have institutions in the agricultural financing programme. The banks are active now in supporting the programme that is commercial in nature but we as government have checked up our system through the social protection programme, Pfumvudza. We have also introduced the commodity exchange to make sure that the market over time drives the price discovery process.”