THE Agricultural Finance Corporation (AFC) Holdings has signed a memorandum of understanding (MoU) with the Grain Marketing Board (GMB) to assist in the management of stop orders for key grains and storage facilities.
AFC group chief executive officer Francis Macheka told the Parliamentary Thematic Committee on Peace and Security yesterday that the MoU was a framework to work together as critical players in the agricultural sector in managing stop orders for key grains as well as storage facilities.
“GMB is an off-taker that the farmers use to borrow from the bank, especially for maize and wheat,” Macheka said.
GMB facilitates stop order payments for the bank’s clients and farmers are required to register stop orders against their expected proceeds with GMB and TIMB.
"The bank is also working on modalities to get repayments in the form of the actual product (grain). Payment with the product is feasible given that we have an AFC Leasing Company which harvests for farmers and does an arrangement for delivery of products to the GMB, chargeable to the farmer, and this enhances repayment of the loans."
“Generally, most repayments are based on the proceeds from the sale of the funded crops, taking away pressure on the farmer. It should, however, be appreciated that average farmer loan recoveries in the market are very low due to several reasons including poor performance, viability issues, side marketing and climatic issues,” Macheka said.
On interest rates, Macheka said the bank is accessing funding from RBZ at 102% and 115% from the market and a bank margin of 15% to 20% is charged to cover operational costs.
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