Exploring Innovative and Sustainable Financing of Agriculture in Zimbabwe’s Second Republic

Abstract

The land reform programme in Zimbabwe began in 1980 following the signing of the 1979 Lancaster House agreement, targeting a more equitable land distribution in the country between black subsistence farmers and white commercial farmers. The Fast Track Land Reform Programme (FTLRP) of 2000 marks a watershed in the development of Zimbabwe’s agricultural sector and it continues to have far-reaching implications in relation to the possibilities of innovative and sustainable financing of agriculture. Using primary, secondary and anecdotal evidence on agricultural livelihoods, this study explores effective, innovative and sustainable agriculture financing approaches that address the financial needs of new farmers in post-Mugabe Zimbabwe. This includes innovations in traditional financing options such as conventional agricultural financing, bank loans, contract farming, joint venture financing, ICT-based mobile payment platforms and financing of agricultural research and extension. The chapter shows that there is no clearly marked shift in agricultural financing between the First and Second Republics as most financial institutions are still stuck in their traditional financing models with only cosmetic and superficial innovations in some instances meant to play ball to the direction of the political whirlwind. The willingness to move towards innovative approaches exists but the usual fear of the unknown hampers and slows down the desire to innovate, particularly so among senior management of financial institutions. The study recommends clear policies aimed at improving agricultural finance in the country through necessary and long-overdue increased agricultural financial intermediaries. Agricultural finance institutions must develop innovative agricultural financing portfolios capable of eliminating financial dependence and moral hazards that disrespect basic banking principles.