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Smallholder farmers to benefit from US$15 million loan

by Staff Reporter
12 Dec 2022 at 01:02hrs | Views
SMALLHOLDER farmers will soon benefit from a US$15 million loan obtained by the Government from the OPEC Fund for International Development.

Finance and Economic Development Minister Professor Mthuli Ncube last week gazetted the loan agreement under Constitutional provisions with Parliament set to have the final word.

The minister said the OPEC-fund money would be used to transform small-holder farming in the country.

"The loan will be used for transformation of the smallholder farming sector through value chain investments by smallholder farmers and agribusinesses, commercialisation of smallholder agriculture in the key urban-rural agricultural production and food trading corridors, infrastructure development including climate-proofed irrigation systems, rehabilitation of feeder roads and multipurpose community water supply and creating a conducive policy and institutional environment for smallholder agricultural transformation," Prof                                                        Ncube said.

The loan's final maturity date is November 15, 2041, and it will attract an interest rate of 1 percent per annum while the commitment fee shall be 0,5 percent a year on the undrawn balance and a grace period of five years beginning July 12 this year.

The loan facility and loan guarantees will become effective once approved by Parliament.

The loan is provided under OPEC Fund's Food Security Action Plan, a US$1 billion commitment to address global food insecurity.

The programme will target key urban and rural agricultural production and food trading corridors in five provinces — Mashonaland Central, Mashonaland East, Mashonaland West, Midlands and Matabeleland North — and benefit 78 000 small-scale farmers.

Fifty percent of the beneficiaries will be women and at least 30 percent will be youths.

When the loan was signed, OPEC Fund Director-General Dr Abdulhamid Alkhalifa said: "Addressing global food insecurity and protecting the most vulnerable and affected populations is a priority for the OPEC Fund.

"Improving productivity and sustainability of small-holder farmers in Zimbabwe will help to create new employment and improve livelihoods."

Besides gazetting the loan, Prof Ncube also gazetted loan guarantees with local banks for Silo Foods and Sable Chemicals.

On the $550 million loan guarantee for Silo Foods with FBC Bank, Prof Ncube said: "The sole purpose of the loan facility is to finance the procurement of raw materials in the manufacture of meals and stock feeds.

"The guarantee shall remain valid and in force until August 5, 2023."

The company's $200 million loan with NBS will also attract the same conditions while Sable Chemicals' loan guarantee "shall remain valid and in force until all amounts due under the terms and conditions of the facility are paid".

Silo Food Industries Limited is a company established in July 2018 to produce and distribute value-added agricultural products, food and livestock products after Government, through a Cabinet resolution in May 2018, directed that all commercial activities of the GMB be separated from its core functions of a strategic grain reserve.

Sable Chemical Industries Limited is borrowing $390 million from ZB Bank to finance ammonia imports from South Africa, and the Government needs to guarantee this loan.

Sable is a fertiliser manufacturing company mainly producing ammonium nitrate and is owned by Government through the Industrial Development Corporation.

Source - Herald