MBT urges more agro-oriented loans for small-scale farmers

MBT urges more agro-oriented loans for small-scale farmers
Written by Nchima Nchito Jr
Saturday, May 23, 2009 7:41:46 AM

MICRO Bankers Trust (MBT) has called for more agro-oriented loans among financial institutions to be directed to small-scale farmers in rural areas. In an interview, MBT Financial Services programme coordinator Bernard Lusale said the agriculture sector needed a lot of support to attain its full potential.

“There is a lot of demand for financial services in rural areas and this is mostly by small-scale farmers,” he said. “That demand is creating a lot of pressure to mobilise finances.” Lusale said the lack of access to finances, among other challenges, impacted negatively on the farmers’ ability to increase productivity. He also welcomed the opening up of the banking sector in Zambia which he said had seen the arrival of four new banks within a few months.

“The arrival of these banks is a welcome development. However my only concern is that these banks should not only concentrate on the line of rail but also strive to penetrate the unbanked population in the country,” he said.

Bank of Zambia assistant director for regulatory policy and licensing Nobbert Mumba recently affirmed that only 33 per cent of the Zambian population was banked. Lusale further said the challenges being faced by the farmers tended to also hinder income generation. “The farmers have to face the challenges of a not readily available market for their produce thereby negatively impacting on their income potential,” he said. Lusale pointed out that his organisation had a deliberate policy of focusing on the agriculture sector in terms of financing.

“We have given out about K2.2 billion in loans to individuals and small-scale farmers in a bid to boost the agriculture sector,” he said. Lusale however said the high cost of delivery of financial services especially in rural areas posed a big challenge to financial institutions.

“Working against such challenges, we have to also deal with the devaluation of the kwacha against other currencies coupled with high interest rate. These factors tend to make the micro-lending business a challenge,” said Lusale.