The Sunday News
THIS week I thought I should walk the jungle and tackle a subject which I totally have no clue about, finance. I have a nearly non-existent background in finance and related fields and therefore I make no apologies for errors of commission and omission in this piece. One of the critical sectors in the farming fraternity in general and livestock rearing in particular is the banking sector.
Sadly, this sector has remained painfully rigid and straight jacket to the extent that it has no meaning or relevance especially to the smallholder farmers. Where the banks have tried to gingerly tip-toe around supporting smallholder farmers is mainly around the crop production sector simply because of the time frames involved. Crops are generally short season and banks will start getting repayments anytime from three months. That is not possible with livestock except poultry production. The import of this article is to challenge banks to move out of their cocoons and begin to design products that talk to smallholder livestock farmers.
The banks have to evolve with other facets of the economy not to remain rooted in pre-medieval ways of doing business. One of the giant mobile service operators in this country has adequately demonstrated and flagged out yawning gaps that the banking sector has failed to close.
The mobile operator moved in and tapped into the previously largely unbanked rural sector and they can now easily transact without visiting any banking premises.
Smallholder farmers contribute around 70 percent of the 5,3 million national cattle herd and that makes this sector a critical sector in promoting any livestock development initiative. It is a sector which cannot just be ignored or trivialised but at the same time it is a sector comprising mainly of resource constrained farmers who need a leveraging hand here and there. Banks should begin to design ground breaking products that are completely outside the proverbial box. Products that will answer to the daily challenges facing this important sector. Banks should move out of the elitist and at times pre-colonial mindset of viewing smallholder farmers as nothing more than glorified beggars occupying a transitional zone between poverty and abject poverty that are a high risk investment not worth taking.
They should begin to ask themselves questions such as what can we do to contribute to the growth of the smallholder livestock farmers?
What can we fund and get meaningful impact on the lives of these farmers? This tired story of collateral or lack of it cannot wash anymore and cannot be the sole hindrance towards investing in this critical sector of our economy.
One of the most persistent challenges that are faced by the smallholder livestock farmers is drinking water for the animals during the dry season. It is common knowledge that in Matabeleland most rivers are seasonal and therefore water sources for livestock are very scarce during the dry season. Farmers’ livestock has to walk for about 15 kilometres in some cases to get water from some well dug on the riverbed for both human and livestock watering. This is the reason why animals in communal areas quickly deteriorate in condition even when the grass is still available.
In fact when animals die of starvation the most common factor is unavailability of water within reasonable distances. The water challenge facing most smallholder farmers can be solved by drilling a borehole and drilling a 60-metre borehole costs anything around $9 500 including the casing. So a smallholder farmer just needs a finance institution that will support him to drill a borehole at that cost and serve his 35 head. Now is this too much to ask from the financial institutions to come in with a product that can suit these types of farmers in that regard and still make money as a bank?
Smallholder dairy farmers need bank loans to buy better breeds and bulls for their dairy enterprises, can’t the bank chip in and assist the farmers and work out modalities for repayments and security of investments? This is what I am talking about not rocket science. Surely with our PhDs and Masters degrees in economics, finance, accounting we still cannot come up with solutions to solve our parents, kith and kins’ problems? After all most of you went to school through money from livestock sales by your parents.
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