New financing agreement to strenghten rural financial sector #zambia

IFAD invests in rural farmers to boost access to rural
finance services in country
The government of the Republic of Zambia and the
International Fund for Agricultural Development (IFAD)
signed a loan agreement for a US$26.315 million project
that will provide rural financial services to smallholder
farmers who currently do not have access to such services
in rural communities throughout the Southern African
nation.
The Zambia Rural Finance Expansion Programme will be
co-financed with a $10.8 million loan from IFAD directly; a
$11.988 million (Euro 9 million) loan from the IFAD
managed Spanish Food Security Cofinancing Trust Fund;
and a contribution from the government of Zambia. The
financing agreement was signed yesterday by Alexander
Chikwanda, Minister of Finance and National Planning of the
Republic of Zambia, and by Kanayo F. Nwanze President of
IFAD.
Agriculture in Zambia accounts for about 20 per cent of
GDP and has the potential to be a major source of economic
growth as the country has abundant fertile land and good
rainfall. This potential can be better realized through
investments in improved production, processing and
marketing. Investments like these will be promoted by
strengthening and diversifying rural financial services.
Currently only about 37 per cent of the adult population use
financial services, and only 14 per cent of them have bank
accounts.
The new Rural Finance Expansion Programme is designed
to help 140,000 rural households by increasing their access
to and use of sustainable financial services. The
programme will target small entrepreneurs and smallholder
farmers while paying particular attention to women and
young people. It is estimated that at least 50 per cent of the
beneficiaries will be women and 25 per cent youth.
The programme will be managed by Zambia's Ministry of
Finance through its Investment and Debt Management
Department, complementing and reinforcing other rural
finance services development initiatives such as the IFAD-
funded Rural Finance Programme completed in September
2013. In addition, it aims to enhance the capacity of
financial service providers to deliver demand-driven
services in rural areas. This will help increase in the
number of adults using financial services, and reduce the
cost of borrowing.
Since 1981, IFAD has invested a total of $188.5 million in
13 programmes and projects in Zambia, with a total cost of
$315.3 million including cofinancing, benefiting 741,280
Zambian families.