Zambian bank bolsters rural economy

by Richard Kilner

Story link: Zambian bank bolsters rural economy

The Zambia National Commercial Bank has been praised for its Munda credit facility, aimed at assisting peasant farmers.

The ZNCB is one of several lenders to agriculture in Zambia, but stands out from the crowd because of its lending to peasants farmers.

Almost the entire food needs of the rural populace is met by peasant farmers, who also contribute to the economy through production of commercial crops such as tobacco or cotton.

However, small scale farmers have faced difficulties acquiring credit, unlike their commercial counterparts who have assets ready to be used as collateral against any loans they take out.

The risky way in which banks have generally viewed peasant farmers has led to a near total lack of expansion and growth, preventing new jobs and higher food production in the rural economy.

However, this situation has changed due to the ZNCB’s Munda credit facility, which requires a 50% down payment.

The loans would then be repaid after the harvest, and enable the farmers to increase the size of their land, and the size of their loans, year on year.