News Column

Zambia, Ifad Ink U.S.$26 Million Loan Deal

July 25, 2014

James Kunda

ZAMBIA and the International Fund for Agricultural Development (IFAD) have signed a loan agreement worth US$26.315 million to provide rural financial services to small-holder farmers.

The Zambia rural finance expansion programme will be co-financed with a $10.8 million loan from IFAD directly; $11.988 million loan from the IFAD managed Spanish Food Security Co-financing Trust Fund; and a contribution from the government of Zambia.

This financing agreement was signed yesterday by Finance minister Alexander Chikwanda and IFAD president Kanayo Nwanze.

Agriculture in Zambia accounts for about 20 per cent of the Gross Domestic Product (GDP) and has the potential to be a major source of economic growth.

This is contained in a statement issued by head of the IFAD communications division, David Paqui.

Dr Nwanze said that investments like these would 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," he said.

He said 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.

Dr Nwanze added that the programme would target small entrepreneurs and small-holder farmers, while paying particular attention to women and young people.

Mr Chikwanda said the programme would be managed by the 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 and this will help increase in the number of adults using financial services, and reduce the cost of borrowing," he said.

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Source: AllAfrica

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