Financing in Agricultural Value Chains in Zimbabwe

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Rural smallholder farmers have often been excluded from accessing funding as they are largely regarded as farmers who only produce for subsistence. However, the Zimbabwean agro-food sector has undergone major changes since the Fast Track Land Reform Programme (FTLRP) was implemented in 2001. Most of the production is now done by smallholder farmers as most commercial farmers who used to dominate the sector left the country after their land was dispossessed. These changes influenced key stakeholders to think about new models of production, marketing, and financing. The aim of this study was to analyse financing in agricultural value chains with a focus on rural smallholder farmers in Zimbabwe. The article used the case of rural farmers in Matabeleland North Province in the Binga and Hwange districts who have been developing localised financing models with the assistance of Non-Governmental Organisations. Data was gathered through a quantitative survey, qualitative in-depth interviews, and focus group discussions (FGDs). The findings show that rural smallholder farmers face funding complexities as they have limited acceptable collateral to secure financing from conventional financial institutions. The major value chain financing model in the study area is a facilitated model driven by interventions of developmental agencies and certain arms of the state. The existing value chain financing model is functional for as long as its major drivers are present. However, in their absence it is likely to be challenged as structural obstacles that limit farmers’ access to credit remain unsolved. Therefore, it is recommended that the government creates an affordable finance subsidy for farmers. In addition, financial institutions are encouraged to extend the scope of acceptable collateral to include assets that are accessible to rural farmers.