LUSAKA, May 27 - International Fund for Agricultural Development (IFAD) team leader Howard Johnson has said the provision of banking services in rural areas needs to be enhanced.
In an interview yesterday during a stakeholders workshop on rural finance, Johnson said the sustainability of programme investments in rural areas needed complementary support through favourable policy frameworks.
He noted that without an effort to confront the provision of financial services in rural areas, the rural economy would continue to be handicapped.
Johnson said IFAD's strategy for Zambia and the region prioritises support for rural finance.
"We are trying to get funds to smallholders as these have always been disadvantaged largely due to the risks involved and the cost of reaching large numbers of farmers," he said.
"We are looking at different ways of reaching out to them."
Johnson explained that one of the strategies would the introduction of simple savings among rural based smallholder farmers.
"This has proved to be a successful programme in other countries because even the poorest farmers can participate," he said.
On the proposed rural finance programme in the country, Johnson said there was need to enhance the capacity of the National Savings and Credit Bank (NSCB) in extending support to rural smallholder farmers.
He noted that NSCB could respond to the financial services' needs of rural smallholders and enterprise groups if it could expand its branch network and was strengthened in financial and managerial terms.
The rural smallholder programme, which is under the auspices of IFAD, would be implemented over a period of six years and the estimated cost of the programme is US $17 million.
About two-thirds of the costs would be towards the promotion of rural banking and financing contracted smallholder production.
Johnson noted that IFAD has also been providing credit facilities to companies involved in supporting outgrower schemes, such as Dunavant, in conjunction with commercial banks.
And officiating at the workshop, acting permanent secretary in the Ministry of Finance James Mulungushi said the financing programme would assist government efforts in improving access to finances by individuals, groups and enterprises in rural areas.
He said the government would undertake to ensure that macroeconomic stability was enhanced in order to make funds more attractive.