The Development Bank of Southern Africa (DBSA) has approved R104.6 million corporate loan to support the Cotton Company of Zimbabwe’s (Cottco) inputs credit scheme for small – scale cotton farmers in Zimbabwe.
The Group Executive for International Division at DBSA, Admassu Tadesse said: “This is a first ever landmark investment in Zimbabwe by the DBSA. Through this investment communal and small scale farmers would have access both to credit and capacity building programmes which will empower them (farmers) to grow more cotton”.
“The investment is in line with the Bank’s mandate and strategy to support development and viable projects in key economic sectors such as agriculture. Moreover, the project is aligned with the government of Zimbabwe’s Short Term Economic Recovery Programme (STERP), which has identified agro-processing and agriculture as key priority sectors to drive the recovery of the domestic economy”, Tadesse said.
The agricultural sector has been hugely affected by the lack of access to foreign currency of both short and long term tenors, resulting into minimal progress in terms of resuscitating the sector.
He added that DBSA had to intervene to support Cottco as local companies were facing difficulties in accessing appropriate finance to cover their day to day operations as well as capital expenditure needs.
“The Zimbabwean economy is heavily dependent on agriculture, which contributes up to 17% of GDP, 60% of manufacturing inputs, 35% of foreign exchange earnings and 15% of formal employment. We firmly believe that the DBSA loan to Cottco, which is the dominant player in the domestic cotton industry, will go a long way towards supporting the revival of the industry, protect existing jobs in the sector and create further employment opportunities. And it is expected that during the buying season, Cottco will employ more than 5000 people on average representing about $3.6 million in wages”, Tadesse said.
“Building sustainable regional economies remain a priority area that the DBSA will aggressively pursue to ensure that the region is prosperous, integrated and progressively free of poverty and dependency. And we remain committed to deepen our developmental impact through expanded access to development finance” he added.
Cottco runs the largest Inputs Credit Scheme in Zimbabwe, with 127,000 growers and 242,000 hectares under tillage and has the most extensive network of growers, infrastructure, resources, geographical reach and know-how. Through the scheme, inputs such as seeds, fertilizers and chemicals are provided to contracted farmers during the growing season in accordance with recommendation of Cottco’s agronomists.