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 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.
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