Finance Economic Development and Investment Promotion Minister Mthuli Ncube has approached Parliament to seek approval to borrow US$37.1 million from the International Fund for Agriculture Development (IFAD).
The loan with a repayment period of 40 years is meant to support the Horticulture Enterprise Enhancement Project (HEEP).
This project aims to support increased and sustainable horticulture production and sales by smallholder farmers and micro, small, and medium enterprises engaged in horticulture value chains.
The loan got approval in the National Assembly mostly from Zanu PF legislators who are the majority, even though it was objected by Citizens Coalition for Change legislators.
Below is the full text of Minister Mthuli Ncube’s loan approval request:
THE MINISTER OF FINANCE, ECONOMIC DEVELOPMENT AND INVESTMENT PROMOTION (HON. PROF. M. NCUBE): Mr. Speaker Sir, I rise to give a motivation for the approval by Parliament of a loan between the Government of Zimbabwe and the International Fund for Agricultural Development (IFAD). According to Zimbabwe’s Economic Development Blue Print, the National Development Strategy 1 (NDS1), 2021 to 2025. Government prioritised the recovery of the agricultural sector which is a key enabler to the country’s economic growth.
The Horticulture Enterprise Enhancement Project (HEEP) increases agriculture production and productivity, especially by horticultural farmers, which enhances food and nutrition security, income, increased opportunities for value addition and the development of agro-business value chains. To this end, Government secured a US$37 140 000.00 (Thirty Seven Million, One Hundred and Forty Thousand United States Dollars) loan from IFAD to enhance horticulture production and productivity. The Project is being co-financed by the OPEC Fund for International Development (OPEC).
The Horticulture Enterprise Enhancement Project
The objective of HEEP is support increased and sustainable horticultural production and sales by smallholder farmers and micro, small and medium enterprises (MSMEs) engaged in horticulture value chains.
The Project shall benefit poor smallholder farmers, who will be organised in Agricultural Producer Groups (APGs) in Village Horticulture Gardens (VHGs) and Agricultural Producer Groups in 4Ps linked to anchor firms. The Project will be located in four (4) provinces: Matebeleland South, Masvingo, Midlands and Manicaland for the Village Horticulture Gardens (VHGs) and for the 4Ps, the project will be located in well-functioning irrigation schemes throughout the ten provinces of the country, in particular in the high potential regions of Mashonaland provinces and Manicaland province.
Three Components supported
The project will support the following components; Component 1: Village horticulture garden and the 4Ps, mobilisation and development, Component 2: Access to finance, and Component 3: Institutional support and project coordination.
The condition for drawing down on this loan is ratification by Parliament, Mr. Speaker Sir. In terms of interest, this is really a zero-interest loan arrangement. In terms of service fee, this shall be determined by the fund at the date of the approval of the load by the Farms Executive Board. Terms of repayment of the principal, the principal of the loan will be paid at 4.5% of the total principal of $1.6713 million per annum for the year 11 to year 30 and 1% of the total principal which is USD371 400.00 per annum for the years 31 to 40.
The total tenure for the loan is 40 years, there is a grace period, the first ten years where we will not be paying anything, we then begin payment in year 11 Mr. Speaker Sir. In terms of modalities, the repayment of the principal shall be made obviously from the National Budget.
What are the expected benefits from the project? Agriculture is one of the economic pillars of Zimbabwe and the support for small holder farms will go a long way in achieving the thrust of the National Development Strategy 1 (NDS1) of food security. The implementation of the project will result in the following benefits; Employment creation for the local communities; Capacity building for local communities; Climate-smart agriculture and easy market access; Improved food nutrition and security; Increased household incomes; Improved resilience to climate change effects and economic shocks, and Increased production and productivity. Thank you, Mr. Speaker Sir.
