therefore inaccessible for agricultural production purposes. Most outgrower schemes are
also operated as short term projects by donor funded non-governmental organizations
(NGOs). Although a good source of small credit, the short-term nature of these schemes
has been a limiting factor. Moreover, the loans, averaging less than $600, are often too
small to enhance meaningful investments in agricultural production, agro-processing and
related projects.
The foregoing inadequacies of the credit environment in stimulating the growth of
smallholder agriculture in line with the PRSP led to the establishment of ZATAC Ltd. in
2002. ZATAC Ltd. is a Zambian company that was incorporated as a private non-profit
institution following the successful turn-around of the country’s smallholder dairy
subsector in Kazungula district in 2001.
The ZATAC Approach
The ZATAC Investment Fund (ZIF) was established with the strategic aim of helping to
commercialize smallholder production through increased access to credit. As a way of
sustaining the activities started under the project, ZATAC Ltd. was registered as a non-
profit company in 2002. In August 2004, the ZIF had a small loan portfolio of about
$320,000. Since then, the ZIF has attracted a number of funding agencies that have
channeled loan funds for specific development financing needs through it. As of March
2007, ZIF had a total loan outstanding amount of about $2,500,000. Of this portfolio,
57.5% is in loans to institutional borrowers (usually agro-processors and exporters that
provide a primary market to the smallholder producer groups) with the remaining 42.5%
in loans to small-scale farmers organized in cooperatives. Thus the current microfinance
portfolio at ZATAC is $1,060,000. About 64% of the loans to the cooperatives are further
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