Lending to Agribusinesses in Zambia

loaned by the cooperatives to their individual members, usually 25 - 30 members per
cooperative. The remaining 36% is composed of medium to long term infrastructure
development loans, such as buildings and equipment.

The ZATAC technical approach for commercializing smallholder production
involves five phases. The first phase involves evaluating the commercial potential for
smallholder production to help smallholders transition from subsistence production to
cash-earning production and value-addition to maximize returns to labor and investment.
The second phase involves identifying and mobilizing producer communities resulting in
the development/strengthening of formal business groups and cooperatives. Phase three
involves the training of producer groups/cooperative members, usually provided in three
tracks: (a) technical skills focusing on animal husbandry, crop production, quality
control, (b) business and management skills, including farm budgeting, book-keeping,
financial management, markets and marketing, and (c) organizational
development/cooperative governance to help raise collective consciousness by pooling
resources and building solidarity. In phase four, credit is provided to the smallholder
producers through their cooperatives. The loans are in three forms: (a) short term (3 - 6
month) working capital, trade finance and seasonal loans; (b) medium term (1 - 3 year)
loans usually for capital investments, such as purchase of dairy cows; and (c) long term
(3 - 10 year) loans mainly for plant and equipment. Phase four is accomplished through
the ZATAC Investment Fund. The final phase, which runs concurrently with phases one
through four, involves building long term relationships between ZATAC and the
smallholder producer institutions.

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