twitter Facebook Linkedin acp Contact Us

Zambia’s farmers financial needs and meeting them

Stanbic focuses on Agriculture in Zambia - Image credit to cpar-tanzania.blogspot.com

Stanbic focuses on Agriculture in Zambia

Twelve months ago financing agriculture in Zambia was not seen as a core offering of the Bank and not much attention was paid to it. But with Agriculture being the second biggest contributor to Zambia’s GDP (20.9 per cent), the Bank identified an opportunity and made the strategic decision to change its focus and spread its significant agricultural knowledge to the Zambian market.

In December 2009 an Agricultural unit was set up and in February 2010 Stanbic Bank Zambia officially launched its Agricultural offering to the market. Having researched what other banks were offering in the agriculture space, Stanbic Bank Zambia brought to the market four key differentiated offerings. Firstly, many farmers plant a winter and a summer crop but existing banks playing in the agricultural space would only extend finance for the winter crop, once finance for the summer crop had been repaid and vice versa. However, due to the overlap in timing the situation on the ground was that one crop needed to be planted whilst the other crop was being harvested. This had the result that planting dates were delayed due to the lack of available finance for the next planting season. Stanbic Bank Zambia has addressed this by structuring the finance offering to allow farmers who are in the process of harvesting one crop to access finance for the next season’s crop prior to repayment of the initial loan.

Loans

Secondly, agriculture is a long term business, but financial institutions in Zambia were only offering 3-5year term loans which immediately placed farmer’s cash flow under severe pressure. Buying a farm or acquiring additional land by repaying it over a period of three to five years makes land purchase and land expansions almost impossible, other than where large amounts of cash are readily available. Through structured finance Stanbic Bank Zambia is able to offer the agricultural market loans of up to 10 years which allows farmers to spread costs over a longer period of time, in line with the long term nature of the business and the assets acquired.

Productive value

Thirdly, banks were advancing loans to farmers on the same principle as for any retail or corporate business, known as balance sheet lending. However, Stanbic Bank works on the concept of determining the productive value of a farm which forms the basis for advancing any lending to farming customers. The fourth differential in Stanbic Bank Zambia’s offering is the fact that the agricultural relationship managers are located in the respective farming blocks which improves their availability to farmers on a 24/7 basis. They are able to attend to farmers needs efficiently and proactively which does not always occur if they are located in a centralised location such as Lusaka. All of this is complimented by the fact that Stanbic is making it an objective to improve on credit turn around time and to introduce farmers to the decision makers in the Bank through various customer interventions. “We have first listened to the needs of our farming customers and then provided them with financial solutions that suit those needs,” says Nelus Agenbach, Director Personal and Business Banking in Zambia. “We have made a significant difference in the way we lend and present our agricultural offering and the market has welcomed the change.”

Jacques Taylor, Director Agricultural Banking says “Agriculture is a significant contributor to Africa’s GDP and is core to Standard Bank’s business in Africa.  Understanding the local markets and customer needs are important to allow the Bank to offer an agricultural solution that is tailored for a business’s needs.” The lesson learned is that there are always opportunities in the way business models are applied if one can see the possibilities that are out there.

The Bell team in Richards Bay consists of more than 800 machinists, welders, and assemblers. (Image source: Bell)

GFE Power Product’s extensive range covers generators from 10 kVA up to 3,000 kVA. (Image source: GFE Power Products)

The funding is the largest-ever equity raise in the minigrid industry according to Husk. (Image source: Adobe Stock)

The initiative will help African contractors participate in annual infrastructure investments. (Image source: Afreximbank)

ITS has evolved into a sophisticated systems approach, providing numerous opportunities to revolutionise road networks. (Image source: Adobe Stock)

Invest International’s Lara Muller; Ivory Coast Minister of Finance and Economy, Adam Coulibaly; and Ambassador Designate to Ivory Coast, Jeroen Kelderhuis. (Image source: Invest International)

The Yellow Metal Machine Rental team with some Wacker Neuson equipment. (Image source: Wacker Neuson)

Although displaying resilience, the report warns that African banks remain exposed to physical climate risks due to both sovereign and industry lending. (Image source: Adobe Stock)

WAA and VCMI will seek to establish regulatory frameworks to enable access to high integrity and fair voluntary carbon markets for WAA member countries. (Image source: Adobe Stock)

The parties will also promote the mutual exchange of information and expertise in the field of export credit policies and practices. (Image source: TBD Group)

Inside Condra’s Johannesburg factory: an overhead crane positions an electric motor during assembly of hoist and crab. (Image source: Condra)

IVECO is renewing its entire product range, all at once. (Image source: IVECO)

The MoU was signed alongside the Africa Health Business Symposium. (Image source: Africa CDC)

Both the IMF and EIU expect SSA to rank as the world’s second fastest growing economy in 2024. (Image source: Adobe Stock)

There has been a focus on the sugar industry. (Image source: Adobe Stock)

Evolving concept of energy security must address energy demand, system flexibility, technology access and infrastructure development, says IRENA. (Image source: IRENA)

World Bank & African Development Bank partner to provide electricity access to 300 million Africans by 2030, leveraging public-private investments. (Image source: Adobe Stock)

At WFES, Gotion High-tech will showcase its latest products and leading green energy solutions at its booth. (Image source: Gotion High-tech)

The new Perkins 5012 is a full-authority electronic engine optimised and purpose-built for power generation applications. (Image source: Perkins)

SSAB will begin deliveries of the new products in 2026.

The key issues restricting sub-Saharan Africa’s manufacturing sector will be unpacked at Manufacturing Indaba later this year. (Image source: Adobe Stock)

Hyphen is developing sub-Saharan Africa’s largest, most advanced and only fully-vertical integrated green hydrogen project. (Image source: Hyphen)

According to Liebherr, the Used Equipment Marketplace is extremely user-friendly. (Image source: Liebherr)

Electricity storage will be pivotal in unlocking renewable projects and meeting energy demand. (Image source: Adobe Stock)

Africa Data Centres and DPA SA have broken ground on their solar farm in the Free State. (Image source: Africa Data Centres)

A Cat PM310 Cold Planer in action. (Image source: Caterpillar)

A larger stockholding of WEG products facilitates ready access for customers. (Image source: WEG Africa)

African nations have turned to the concept of power pools to address the continent's energy deficit and foster regional cooperation. (Image source: Synergy Consulting)

Dietmar Siersdorfer is expanding his role as Middle East managing director at Siemens Energy to include Africa. (Image source: Siemens Energy)

The Msikaba Bridge has anchor blocks 17 m wide which contain around 21,000 tons of concrete. (Image source: Sanral)