ZAMBIA – Smallholder farmers and rural cooperatives across Zambia are set to benefit from a new €30 million (US$34m) initiative launched by Zambia National Commercial Bank (Zanaco) in partnership with Team Europe, aimed to accelerate agricultural investment in the country.

The new initiative is geared towards improve agricultural productivity, upgrade agricultural processing, and support a sector severely impacted by COVID-19 challenges and is supported by a best-practice assistance program.

This will be achieved through increasing access to finance, support job creation and enhance agricultural productivity.

This represents the first targeted support for agriculture in Zambia by Team Europe through the European Union and the European Investment Bank, the world’s largest international public bank.

The commitment of the European Union and details of the European Investment Bank’s first cooperation with Zanaco, through a new €15 million credit line supporting €30 million of new investment.

This support underlines the institutions as well as Jutta Urpilainen, European Commissioner for International Partnerships’ and Thomas Östros, Vice President of the European Investment Bank’s, commitment to agricultural development in Zambia.

“Zanaco is committed to building on our track-record of supporting agriculture across Zambia by improving access to finance, sharing best practice and innovation to unlock investment across the sector.

“Zanaco is pleased to join forces with the European Investment Bank to roll out Team Europe’s first dedicated support for agriculture in our country. This new partnership will unlock agricultural investment, create employment and unlock economic growth in Zambia in the years ahead,” said Mukwandi Chibesakunda, Chief Executive Officer of Zanaco.

Favourable financing packages

The new financing will provide longer-term loans than normally available in both local and foreign currency, and be complemented by a European Union technical assistance program, to support agricultural companies across Zambia.

Access to finance by small holders and agricultural companies will be further enhanced by a risk-sharing facility backed by the European Union.

“Today we’re cementing the strong bond between the EU and Zambia. Team Europe, including the European Commission, has supported Zambia in its COVID-19 response with nearly €58 million. And as we exit the pandemic, Team Europe is ready to further support the country on its journey to a green, sustainable and inclusive recovery.

“The €15 million credit line signed today will allow smallholder farmers and agricultural businesses to adapt to climate change. It will create jobs, make farmers more resilient, and have an impact on thousands of lives,” said Jutta Urpilainen, European Commissioner for International Partnerships.

The 7 year €15 million (US$17m) EIB loan to Zanaco in combination with the risk-sharing facility that was arranged with the strong support of the EU Delegation in Zambia and the European Commission, will allow €30 million (US$34m) of new investment by small holders and private companies involved in agriculture across Zambia to be supported.

The new financing will also allow longer average loan tenors for business loans and enable companies to better reflect the economic life of new investment.

Under the initiative, Zanaco will provide financing in Zambian Kwacha, USD and EUR to eligible clients that will unlock investment that strengthens the overall competitiveness of Zambian agriculture.

The impact of the new €30 million agricultural financing initiative will be enhanced through best-practice shared under a dedicated technical assistance and training programme.

“Agriculture is crucial for economic activity and social development in rural communities across Zambia. This new €30 million (US$34m) scheme will accelerate investment by smallholders and agriculture companies through increased access to finance.

“The first ever Team Europe cooperation between the European Investment Bank, European Union and Zanaco, will unlock a better future and create employment opportunities throughout the sector and be supported by sharing best-practice agricultural, gender and financial expertise,” said Thomas Östros, European Investment Bank Vice President.

The Frankfurt School of Finance & Management, will support Zanaco in further strengthening their agricultural lending capabilities and enabling agricultural companies led by women and female smallholders to better access the new financing.

Women present a vast share of the agricultural labour force in Zambia but face severe constraints in accessing finance.

The technical assistance program will also support share inclusive and sustainable business practices to ensure that investment by smallholders contributes to poverty reduction, improved food security and more competitive and inclusive agricultural value chains.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE