The Bank of Zambia (BOZ) says the high level of debt among agricultural producers has left the banking sector “nervous” and less willing to provide finance and credit lines.
In a statement released after a meeting held between BOZ Governor Denny Kalyalya and Zambia National Farmers Union (ZNFU) president Jervis Zimba, the ZFU said both parties noted that production has declined in the past 4 years due to erratic weather and policy inconsistencies that negatively impact access to agricultural credit finance. The meeting was held to find ways of unlocking credit financing for farmers.
“Banks that have lent money to the sector have opted for hard positions (to recover the loans) instead of revising the agreements. If the issues around financing are not addressed, agricultural productivity may slide back to the gloom of the 1990s,” the ZNFU said.
Kalyalya said there was indeed a slowdown in agricultural productivity. However, he said bankers and farmers should negotiate towards middle ground in order to stabilise productivity while guaranteeing loan profitably for the banking sector.
According to the BOZ, the contribution of the Zambian agricultural sector to the national gross domestic product has declined from 16.2% in 2005 to just 6.8% in 2016. The bank has proposed a multi-stakeholders meeting to discuss concerns from both parties with a view to unlocking agricultural credit lines.
The ZFU said the government can help revive the agricultural sector by consulting widely to ensure consistency in the formulation and implementation of national agricultural policies.