eBusiness Weekly
Africa Moyo and Ishemunyoro Chingwere
Government is considering to gradually pull out of funding Command Agriculture programme in the medium to long term and in its place rope in the private sector to takeover the responsibility of supporting this strategic sector.
The Command Agriculture programme, which was launched in 2016/2017 summer cropping season in a bid to boost dwindling agricultural productivity, has ensured food security in the country.
Besides, some agro based companies listed on the Zimbabwe Stock Exchange, have also become major beneficiaries of the import substitution programme as they have posted impressive results on the back of the scheme.
Further, the programme has helped the country conserve foreign currency, which is currently in short supply.
Government initially funded Command Agriculture to the tune of $500 million and farmers got crop finance and free inputs, but the programme has since been extended livestock, fish and wheat.
Permanent secretary in the Ministry of Finance and Economic Planning Willard Manungo, last week said the current arrangement where Government is sourcing funds for Command Agriculture is temporary.
Manungo said Government only introduced the programme after realising the magnitude of challenges faced by farmers, particularly those that benefited from the land reform exercise, which started at the turn of the millennium.
“Agriculture is a component of our GDP and you are aware of the extent to which Government has been supporting Command Agriculture,” said Manungo.
“But the Ministry of Agriculture, the President (Emmerson Mnangagwa) (and) the Ministry of Finance; we have all said that our intervention in agriculture through the Command mechanism is really a transitional arrangement.
“It’s a transitional arrangement that recognises the challenges that the new farmer has in terms of capacity and in terms of the skills, the issues of know-how but in the medium-term, long-term the expectation from Government is that the support for Agriculture should be anchored by the private sector.”
Government says the banking sector is a key component of the private sector that has the resources to fund mammoth projects such as Command Agriculture.
Already, several banks have various facilities for farmers, but there is general consensus that the support is not enough since it is uncoordinated.
Manungo believes there is no reason why banks cannot support the agriculture sector when some farmers have been ramping up output while at the same time paying back their loans.
“When we talk of the private sector, the banking sector is a key component of that private sector. So we are happy that the Agribank board and management are all on top of the situation and they are ready to intensify their investments in nurturing the new farmer and that will allow us as Government to begin lowering the support that we are giving farmers.
“It is not all farmers that are making losses, there are a lot of good green shoots out there that need support and Agribank have assured us that they are ready to identify all those green shoots and they become the launchpad in terms of the support that we want to be channelled towards agriculture,” said Manungo.
Agribank has since secured $10 million from the African Export-Import Bank (Afreximbank) to support exporters, agro-processors and value addition.
The bank is also reportedly in advanced stages of negotiations to get a $50 million line of credit from an unnamed regional financier to support agriculture.
It is hoped that the negotiations would be concluded in the next two months.
Timelines for private sector intervention
Government says it will scale-down its support for Command Agriculture once the private sector shows willingness to takeover.
Manungo said: “In terms of the timeframe (of banks supporting agriculture), it is a feature of the speed with which our banking community and the entirety of the private sector are ready to join us in supporting agriculture.
“And the banking sector is not coming in from a charitable perspective, there are huge opportunities in terms of profits that can be made in farming and we are appealing to the banks to say come on board, explore (and) identify those opportunities.
“And as you do that, it then allows us as Government to scale back. I think you are aware that there are a lot of contractors out there that are already doing their part in terms of capacitating agriculture,” said Manungo.
He said private sector support for agriculture is central in generating more foreign currency and helping the country in its quest to achieve middle income status by 2030.
Before Command Agriculture was launched, maize yields had declined to 511 000 tonnes, the lowest since 2008.
But the 2016/2017 harvest, estimated at 2,1 million tonnes, is still in the silos.
It is hoped that once there is private sector buy-in, the agriculture sector would grow exponentially.
In South Africa, commercial banks are the biggest funders of the agricultural sector followed by the Land and Agricultural Bank, agricultural co-operatives, private persons and other financial institutions.
