Smallholder farmers, rural cooperatives secure US$34m from Zanaco to accelerate investment

ZAMBIASmallholder farmers and rural cooperatives across Zambia will benefit from a new €30 million (US$34.81m) initiative from Zanaco and Team Europe to accelerate agricultural investment launched in Lusaka and Luxembourg.

The new initiative will 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.

The financing scheme will be managed by Zanaco and is backed by the European Union and European Investment Bank, as part of the broader Team Europe support for sustainable commercialisation of Zambian smallholder farmers.

This represents the first targeted support for agriculture in Zambia by 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 (US$17.41m) credit line supporting €30 million (US$34.81m) 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,” said Mukwandi Chibesakunda, Chief Executive Officer of Zanaco.

“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.”

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.

The 7 year €15 million (US$17.41m) 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$34.81m) 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 (US$34.81m) agricultural financing initiative managed by Zanaco will be enhanced through best-practice shared under a dedicated technical assistance and training programme.

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.

The EIB has supported private and public investment across Zambia since 1978, including support for transformational water, energy and transport projects, alongside financing business growth.

The European Investment Bank is the world’s largest international public bank, owned directly by the 27 European Union member states. Last year the EIB provided € 5 billion (US$5.80bn) for private and public investment across Africa.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.