Smallholder Farmers Gain Access to Credit
MUTOKO, Zimbabwe – Mrs. Nyagande Hazvinei, Mr. Arnold Matambanadzo, and 14 other members of the Chitora II local farmers association are looking forward to six months from now, when they will harvest their first crop of pickle cherry peppers. The farmers are growing this crop for the first time, thanks to a contract they have with Selby Enterprises, a food processing company that sources its produce from farmers near its Harare factory.
Members of the Chitora II farmers cooperative pose in front of their field, newly planted with cherry peppers. The crop will be ready to begin harvesting in about six months.
The farmers were able to take on the risk of this contract thanks to loans of $500 per farmer made possible through the AgriTrade commercial credit facility. The loans will allow the farmers to purchase fertilizer and hire local labor to help prepare the land and then weed and harvest the peppers.
The farmers were guided through the loan process by the AgriTrade officer and Mr. Godfrey Mahulanhova, a loan officer with microKing, one of three financial institutions disbursing AgriTrade loans. Mahulanhova said microKing lends to members of associations like Chitora II, because the farmers can collectively provide the collateral and support each other to make their payments on time, thus reducing the lender’s risk. “I like working as a loan officer, because you see people grow through your efforts,” he said.
microKing Loan Officer Godfry Mahulanhova assisted the Chitora II farmers cooperative to obtain loans through the ZimAIED Agritrade loan facility.
Hazvinei said she expects to make a significant profit from the roughly eighth-hectare plot she has devoted to the new crop. And she is confident she will see a bumper crop of cherry peppers, as she already has experience growing green peppers. Matambanadzo added that the Zim-AIED extension officer has been training them in techniques to grow the crop well. He explained how the peppers are planted in double rows, then mulched with straw. This method facilitates healthy plant growth and easier harvesting down the road.
The farmers expect to reinvest their profits after they pay back their loans over the next 3 to 12 months. They will improve their farming and irrigation equipment, repair or enlarge their homes, and launch new businesses, among other plans.
In the past, access to credit in the agricultural sector in Zimbabwe has mainly supported agribusinesses working with large-scale farmers. AgriTrade is changing this by providing credit to smallholder farmers, agro-dealers in rural areas, small and medium agro-merchants, and contract farming companies.
As a result demand and competition for smallholder farmers’ produce is increasing. The farmers gain access to inputs closer to their fields and guaranteed markets through contract farming arrangements, like the one Chitora II has with Selby Enterprises.
AgriTrade is part of the Fintrac-managed Zimbabwe Agricultural Incomes and Employment Development (Zim-AIED) program, funded by USAID. IRD manages AgriTrade under a subcontract to Fintrac.