This week’s announcement, by the Prime Minister, that the government is planning to set up an agricultural development bank in the near future, is good news to farmers and the various stakeholders in the agriculture sector.
The move is part of a strategy to turn around the entire sector. If the gains in agriculture are to be consolidated, there is no doubt the loans share of the sector must be raised above the current 4 percent.
Agriculture is a major pillar of the economy. It directly or indirectly employs more than 80 per cent of the households in the country.
In the recent past, the government has made significant progress in boosting this sector in terms of research, land consolidation, soil conservation, planting improved seed varieties and irrigation.
But there is need to increase the volume and value of agricultural exports, as well as off-farm jobs.
The government is encouraging banks to increase their flow of credit to agriculture through different schemes, including the agricultural guarantee fund.
Despite the initiatives, banks consider the sector highly risky, which explains why a large percentage of farmers hardly access loans.
So, the need to fast-track the agricultural development bank is based on the fact that it would help transform the sector.