PARLIAMENT has approved a US$15 million loan agreement between the government and Opec Fund for International Development (OFID) signed last year to support small-holder farmers.

This was said on Tuesday in a Parliament by Finance deputy minister Clemence Chiduwa.

The minister made the remarks while raising a motion on the ratification of the loan agreement between Zimbabwe and OFID.

Chiduwa said subsection (3) of section 327 of the Constitution provides that an agreement which was not an international treaty, but which had been concluded or executed by the President or under the President’s authority with one or more foreign organisations or entities and imposed fiscal obligations on Zimbabwe, was not binding until it has been approved by Parliament.

“A loan agreement between government and Opec Fund of US$15 million (is) for part financing of the smallholder agriculture cluster project to be implemented in Mashonaland Central, Mashonaland East, Mashonaland West, Midlands and Matabeleland North provinces,” Chiduwa said.

“Now, therefore, in terms of section 327(3) of the Constitution, this House resolves that the aforesaid agreement be and is hereby approved.”

The programme will improve farmers' engagement in market-oriented and climate-smart value chains while being co-financed with the International Fund for Agricultural Development (IFAD) and the private sector.

Most Zimbabweans rely on farming for their income.

Further, the advent of the COVID-19 pandemic, in addition to frequent droughts, erratic rainfall, and floods, pose a danger to agricultural output and, by extension, food security.

“The project will be implemented, as I have already alluded to, in Mashonaland East, Mashonaland Central, Mashonaland West, Midlands and Matabeleland North and the conditions precedent,” Chiduwa said.

“The loan should be ratified by Parliament, the interest is 1%, the commitment is 0,5% per annum and the tenure as already mentioned is 20 years, the grace period is five years and on repayment modalities, repayment of principal and interest shall be made from the budget.

“The repayment frequency — principal and interest payments shall be made twice a year on 15 May and 15 November of each year, which means it is going to be 30 semi-annual instalments.”

He said the loan would be utilised for the transformation of the smallholder farming sector through value-chain investments by smallholders and agri-businesses.

“Commercialisaton of smallholder agriculture in key urban and rural agricultural production and food trading corridors as well as infrastructure development which includes climate proofed irrigation systems…” Chiduwa said.

“…rehabilitation of feeder roads and multipurpose community water supply and the creation of a conducive policy and institutional environment for smallholder agriculture transformation.”

The project is meant to increase agricultural production, productivity, especially by smallholder farmers, which enhances food and nutrition security, income, increase opportunities for value addition and the development of agro-business value chains.

Chiduwa said the goal of the project was to help increase household incomes and nutrition through the sustainable transformation of the smallholder farming sector.

The development objective of the project is to increase equitable smallholder participation in market-oriented and climate smart chains.

Chiduwa said the loans allowed for the connection of smallholder farmers to profitable value chains, markets and financial services.

“It also allows for the developing of smallholder capacity in climate production systems, marketing and business skills and also the revitalisation of production and market access infrastructure,” he added.

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