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International Partnerships
Press release4 October 2021Directorate-General for International Partnerships

Zambian smallholders to benefit from EUR 30 Million agriculture investment initiative launched by Zanaco and Team Europe

Plantation team transport seedlings
Plantation team transports a cart full of seedlings
© CIFOR - Axel Fassio
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Thousands of Zambian smallholders to benefit from EUR 30 Million (635m ZK) agriculture investment initiative launched by Zanaco and Team Europe

  • First targeted European Investment Bank support for sustainable agriculture investment in Zambia
  • Initiative to increase access to finance, support job creation and enhance agricultural productivity
  • Impact strengthened by agriculture and financial best-practice technical assistance
  • Dedicated focus to increase access to finance by female smallholders

Smallholder farmers and rural cooperatives across Zambia will benefit from a new EUR 30 million initiative to accelerate agricultural investment launched in Lusaka and Luxembourg today. The new initiative will improve agricultural productivity, upgrade agricultural processing, and support a sector severely impacted by COVID-19 challenges and is supported by a best-practice assistance program.

The financing scheme will be managed by Zanaco and is backed by the European Union and European Investment Bank, as part of the broader Team Europe support for sustainable commercialisation of Zambian smallholder farmers. This represents the first targeted support for agriculture in Zambia by the European Investment Bank, the world’s largest international public bank.

The commitment of the European Union and details of the European Investment Bank’s first cooperation with Zanaco, through a new EUR 15 million credit line supporting EUR 30 million of new investment. This support underlines the institutions as well as Jutta Urpilainen, European Commissioner for International Partnerships’ and Thomas Östros, Vice President of the European Investment Bank’s, commitment to agricultural development in Zambia.

At the Lusaka launch, the national importance of unlocking agricultural investment for Zambia by improving access to long-term financing was further highlighted by Central Bank Governor Dr. Denny Kalyalya. Mukwandi Chibesakunda, Zanaco Chief Executive Officer, announced detailed of the new targeted support for agricultural investment and engagement of Zanaco teams across the country to roll-out the new initiative.

“Zanaco is committed to building on our track-record of supporting agriculture across Zambia by improving access to finance, sharing best practice and innovation to unlock investment across the sector. Zanaco is pleased to join forces with the European Investment Bank to roll out Team Europe’s first dedicated support for agriculture in our country. This new partnership will unlock agricultural investment, create employment and unlock economic growth in Zambia in the years ahead.” said Mukwandi Chibesakunda, Chief Executive Officer of Zanaco.

“Today we’re cementing the strong bond between the EU and Zambia. Team Europe, including the European Commission, has supported Zambia in its COVID-19 response with nearly EUR 58 million. And as we exit the pandemic, Team Europe is ready to further support the country on its journey to a green, sustainable and inclusive recovery. The EUR 15 million credit line signed today will allow smallholder farmers and agricultural businesses to adapt to climate change. It will create jobs, make farmers more resilient, and have an impact on thousands of lives,” said Jutta Urpilainen, European Commissioner for International Partnerships.

“Agriculture is crucial for economic activity and social development in rural communities across Zambia. This new EUR 30 million scheme will accelerate investment by smallholders and agriculture companies through increased access to finance. The first ever Team Europe cooperation between the European Investment Bank, European Union and Zanaco, will unlock a better future and create employment opportunities throughout the sector and be supported by sharing best-practice agricultural, gender and financial expertise. Together Team Europe and Zanaco are ensuring that smallholders tackling business challenges related to COVID-19, can expand business and create opportunities and have a more secure future in the years ahead. The new Zambian initiative follows the successful launch of Team Europe support for agricultural investment in Malawi and Kenya and we look forward to launching similar schemes elsewhere in Africa.” said Thomas Östros, European Investment Bank Vice President.

“The European Union strongly supports Zambia’s green recovery, inclusive and sustainable growth agenda. The new “Agriculture Value Chain Facility” will help farmers to get long-term and affordable financing. This will make it easier for agri-businesses and smallholder farmers alike to access domestic and regional markets and to improve the livelihoods of people.” Said H.E. Ambassador Jacek Jankovski, Head of the European Union Delegation to Zambia.

Supporting investment by Zambian farmers and businesses during challenging times

The new financing will provide longer-term loans than normally available in both local and foreign currency, and be complemented by a European Union technical assistance program, to support agricultural companies across Zambia. Access to finance by small holders and agricultural companies will be further enhanced by a risk-sharing facility backed by the European Union.

The 7 year EUR 15 million EIB loan to Zanaco in combination with the risk-sharing facility that was arranged with the strong support of the EU Delegation in Zambia and the European Commission, will allow EUR 30 million of new investment by small holders and private companies involved in agriculture across Zambia to be supported.

The new financing will allow longer average loan tenors for business loans and enable companies to better reflect the economic life of new investment.

Under the initiative, Zanaco will provide financing in Zambian Kwacha, USD and EUR to eligible clients that will unlock investment that strengthens the overall competitiveness of Zambian agriculture.

Strengthening impact and opportunities for women through sharing best practice

The impact of the new EUR 30 million agricultural financing initiative managed by Zanaco will be enhanced through best-practice shared under a dedicated technical assistance and training programme.

The Frankfurt School of Finance & Management, will support Zanaco in further strengthening their agricultural lending capabilities and enabling agricultural companies led by women and female smallholders to better access the new financing.

Women present a vast share of the agricultural labour force in Zambia but face severe constraints in accessing finance.

The technical assistance program will also support share inclusive and sustainable business practices to ensure that investment by smallholders contributes to poverty reduction, improved food security and more competitive and inclusive agricultural value chains.

Latest high-impact EIB engagement in Africa

The EIB has supported private and public investment across Zambia since 1978, including support for transformational water, energy and transport projects, alongside financing business growth.

The European Investment Bank is the world’s largest international public bank, owned directly by the 27 European Union member states. Last year the EIB provided EUR 5 billion for private and public investment across Africa.

Background information

Team Europe brings together the expertise, analysis, networks and resources of the whole EU family – the European Commission, EU Member States, the European Investment Bank, and other European financial institutions.

Details

Publication date
4 October 2021
Author
Directorate-General for International Partnerships