Central Bank of Zimbabwe issues US $50m bond to finance upcoming agriculture season
The Central Bank of Zimbabwe (CBZ) has issued a US $50m bond for purposes of financing the 2019/2020 agriculture season. According to the bank, the bond instruments will finance the importation of farming inputs specifically for maize and soya bean. This, they said, is towards improving the production of the two essential food crops.
Agriculture financing remains one of the major challenges facing the sector that is inarguably the backbone of the Zimbabwe economy. Moreover, foreign currency shortages for the importation of inputs that are not locally available has but only worsened the situation.
According to media reports, 2019 was tough for the sector due to poor crop production, disease outbreaks, shortage of chemicals and high cost of inputs among others. Unfortunately, experts are also predicting another bad 2019/20 rain season, characterized by low rainfall patterns.
The CBZ Bond will be under the commercial contract farming program that is being spearheaded through the CBZ Agro Yield (Pvt) Limited. In a released statement, CBZ Bank explained that they intend to issue a series of 270-day bond instruments to finance the procurement of farming inputs for maize and soya bean that are not available on the local market for the 2019/20 farming season under the commercial contract farming.
Over the past two decades, funding for agriculture has been a challenge especially for the resettled farmers following the land redistribution program as banks required loan applicants from the sector to provide collateral in the form of immovable assets to access funding.
There was still uncertainty on laws surrounding land tenure, which made it difficult for creditors to predict how long the farmers would be entitled to the allocated land. Stakeholder consultations, however, saw the 99-year leases being amended to include a transferability and bankable element in order to improve access to funding for the sector.