AN ambitious plan by the Reserve Bank of Zimbabwe (RBZ) to prop up declining agricultural production by doling out billions of dollars for the sector has backfired, forcing the central bank to garnish the Ministry of Agriculture to recove
r the funds.
The RBZ has garnished the ministry for funds advanced to government to finance an agricultural input programme at the launch of the land reform five years ago.
In the past four years government has poured nearly $118 billion into agriculture to boost production.
The central bank splashed out billions of additional dollars in a vain effort to ensure its widely-condemned land appropriation programme was a success.
Ministry of Agriculture officials informed a parliamentary portfolio committee on agricultural preparedness a fortnight ago that the action taken by the central bank to foreclose on the loan funds had never been explained at the onset of the programme.
Officials in the ministry told the committee that the agricultural input programme was not explained to the farmers, most of whom mistook the credit scheme for government largesse.
The committee said government needs to educate resettled farmers on the input scheme and inculcate in them a culture of self-reliance.
Failure by the ministry to repay funds has forced RBZ to stop allocating fresh funds for the 2005 agricultural season, at a time when there is a severe shortage of fertilisers, seed and fuel to run tillage units.
The central bank has advised the ministry to raise money from the open market where interest rates have soared to 300% due to inflationary pressure.
The committee said farmers were now reluctant to borrow from yet another scheme, the Agricultural Sector Productivity Enhancement Facility citing fears of sinking deeper into debt.
The RBZ initially charged 5% interest on loans under the scheme but reviewed the rates to 20% midstream. – Staff Writer.