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HomeBusinessGovt Programs Crowds-Out Pvt Sector Financing – Analyst

Govt Programs Crowds-Out Pvt Sector Financing – Analyst

Government’s agricultural programs are absorbing local banks’ liquidity at the expense of private players leading to limited participation of the private sector in primary production, said Graeme Murdoch, operations director at PHI Commodities- a subsidiary of National Foods Limited.

Speaking at the ongoing 2021 Confederation of Zimbabwe Industries (CZI) Economic Outlook Symposium, Murdoch said private sector is lacking adequate support from government to improve productive capacity.

Instead, priority was given to government programs such as the Presidential Input Scheme and the CBZ Agro-Yield, an agriculture financing scheme by government controlled -CBZ bank.

“In order to achieve the efficiencies and the results that the Minister is looking for, we do need to start focusing on the efficiencies at farm level and one of the problems for the private sector, whether you are talking about private contractors, whether you are talking about millers or end-users, one of the problems that we have in terms of not reaching expectations of the Ministry in terms of participating more in primary production is that once again we are crowded out by the fact that liquidity is focused primarily on government programs,” said Murdoch.

As a result, most private sector contractors are left with little choice but to borrow at high costs.

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“Whether that is Presidential Inputs program or it’s through CBZ Agro-Yield. If we take the summer crop as a classic example, all productive sector financing was targeted exclusively into the CBZ Agro-Yield and the private sector contractors having to pick up bits and pieces from the other banks and at times at very expensive cost of money,” said Murdoch.

In recent years, government has been criticized for running a costly Command Agriculture program which is never yielded meaningful results.

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