AFC to raise $2,5bn for winter wheat crop
Oliver Kazunga Senior Business Reporter
THE Agricultural Finance Corporation (AFC) Holdings intends to raise $2,5 billion through the issuance of agro-bills to finance production of wheat during the 2022/23 winter cropping season.
‘Agro-bills are negotiable instruments issued by the Government through AFC to finance agricultural programmes.
The State owned agricultural finance institution indicated that the agro-bills, which have a tenor of between 270 and 360 days have a negotiable interest rate and will be governed by and construed in accordance with the laws of Zimbabwe.
“AFC Holdings Ltd intends to issue agro-bills of $2,5 billion to finance the winter cropping season. AFC Holdings Ltd hereby invites corporate and individual investors to subscribe to these agro-bills.
“Applications must be for a minimum of $1 million.
“Capital plus accrued Interest will be paid upon as a bullet on maturity,” said the banking institution in a public notice released at the weekend.
The agro-bills which will be paid on allotment to successful bidders have special features including prescribed and liquid asset status, Government guarantee, and tax exemption as well as AFC Holdings financial guarantee.
Zimbabwe Commercial Farmers Union past president Mr Wonder Chabikwa, who farms in Chegutu, welcomed the development saying as farmers this was something that the agriculture sector has been advocating for in recent years.
“This is something that we have been advocating, for the AFC to be in place because from the past we know what used to happen. In the past, agriculture used to be successful mainly because of the support the sector was receiving.
“So, we are so happy that under a rebranded AFC, the agricultural bank has come back and they are going to provide us with funding for wheat production,” he said.
Formerly Agricultural Bank (Agribank) of Zimbabwe, AFC last year successfully underwent rebranding and restructuring into a land bank to support the country’s agricultural recovery plan which is aimed at ensuring food self-sufficiency.
“It is highly commendable and we are so excited about that as a farmer because we know we have got the capacity to produce adequate wheat for our own requirements, but as you know we are importing every year,” said Mr Chabikwa.
In terms of winter wheat production this season, Secretary in the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development Dr John Basera recently said the agriculture sector has surpassed the Government’s 75 000-hectare target for this season.
As at June 23, 2022, when winter wheat planting for this season ended, a total of 75 452ha had been put under the winter wheat crop.
At the moment, Zimbabwe, which requires about 350 000 tonnes of wheat annually, imports the cereal due to low yield the country experienced in the last cropping season.
The country has over the years been importing wheat from around the world, including as far as South America and Eastern Europe to meet its national requirements.
In light of the Russia-Ukraine war, the Government has this year improved the hectrage under winter wheat cropping to guarantee national food security.
“We have the capacity, we have the land and water bodies but what has been lacking is suitable capital for irrigation infrastructure.
“Water bodies are plenty, but we cannot tap the water because we have no suitable capital funding for irrigation infrastructure development where, through a fund one would borrow and invest in overhead equipment such as centre pivots and sprinklers.
“We hope that as they have rebranded, AFC is coming in to offer such a facility to assist farmers to boost agriculture output and help the country save a lot of foreign currency,” Mr Chabikwa said.
The Zimbabwe Women Farmers Association Trust president Ms Depina Nkomo echoed similar sentiments, adding that such agricultural facilities should be extended even to smallholder farmers.
“What is critical when the Government is coming up with such initiatives, considerations should also be made on smallholder farmers to see to it that they access funding even without collateral security.
“In the past, such initiatives have largely benefited large-scale commercial farmers while a majority of the farmers who are smallholders have been deterred due to collateral issues. Otherwise it is a welcome development that AFC is seeking to raise funding to support winter wheat crop production through the issuance of agro-bills on the market,” she said.