local private investors, and 1 jointly owned by the Zambian Government and the Indian
Government (BOZ 2007). Non-bank Financial Institutions (NFIs) include 1 development
bank, 1 savings and credit bank, 3 building societies (mortgage companies), 3 micro-
finance institutions, 9 leasing companies and 32 bureaux de change. NFIs are regulated
and supervised by the Bank of Zambia under the Banking and Financial Services Act of
2000. There is one exchange: the Lusaka Stock Exchange, established as a modern
securities exchange in 1993 as part of the government’s economic reform program aimed
at developing the financial and capital market in order to enhance private sector
investment (BOZ 2007).
Despite the existence of these financial institutions, agricultural businesses have
limited access to credit. More than 90% of rural farmers in Zambia hold no title deeds to
their farming land. Consequently the average Zambian farmer has little or no access to
loanable funds for commercial farming, as the major lending institutions are generally
unwilling to extend loans for investment on land without title. Further, without title
deeds, the farmers are unable to use their land as collateral for agricultural credit. Given
this scenario, the role of microfinance institutions in ensuring smallholder producers’
access to investment and working capital financing has been identified and supported by
government and the private sector. Small loans have also been provided by outgrower
schemes, especially for cotton, paprika, fresh vegetable and tobacco production. An
outgrower scheme is a contract farming scheme involving the provision of inputs such as
seed, fertilizer, chemicals or equipment, on credit by a lender (usually an agricultural
processor) to small-scale farmers with a contract that the lender will buy all the produce
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