Access to finance is crucial in facilitating investments in productivity-enhancing technologies among farmers, and for increasing the scale of production. This is expected to contribute to increased incomes and food security in primarily agrarian societies.
However, in Zimbabwe, there exists a substantial financial gap in the agricultural sector. The share of commercial loans to agriculture has declined from 19% in 2012 and currently stands at about 16.7%. This is because of high risks, insufficient funds among financial institutions, the high cost of lending, and lack of formally recognized collateral. If left unresolved, this has potential to perpetuate low farm productivity.
The Food and Agriculture Organization of the United Nations (FAO) is the Managing Agent for the LFSP’s Agricultural Productivity and Nutrition (APN) component. FAO, together with its policy partner Indaba Agricultural Policy Research Institute (IAPRI), have produced a policy brief to illuminate the issues around Unblocking Supply of Agricultural Finance in Zimbabwe.
For further insight into these and more issues access the policy brief, here (PDF).