An assessment of Zambia National Framers Union Lima Credit Scheme

Abstract

Zambia's market for agricultural finance is challenged, from the farmers' perspective, credit is scarce and expensive and heavily skewed towards the larger, corporate sector. Banks on the other hand, are reluctant to lend without very high collateral coverage and a high risk premium. The LIMA credit scheme recognises the importance to bridge the gap between agricultural finance and small scale farmers. This scheme originated from a need of credit services expressed by ZNFU members. The LIMA scheme was developed in-house by the ZNFU in close consultation with its commercial financial partner Zambia National Cooperative Company PLC and other private sector stakeholders. The main objective of the study is to assess the model being applied by ZNFU to facilitate access to credit to smallholders farmers in Zambia and analyse the benefits that are accruing to the small-holder famers. The study was conducted in Chongwe. It used a Semi-structured questionnaire on randomly sampled LIMA beneficiaries. The data was analysed using Special Package for Social Scientists. The survey results revealed that beneficiaries of the LIMA Scheme showed an improvement in income generated from farming activities. There was also significant increase in the number of farmers that are currently on the LIMA program (from 250-4026). The research also revealed that this package is achieving its set objectives which is to provide small-scale farmers with agricultural services based on group Savings and Loans approach linked to the commercial sector. The assessment highly recommends that the program should be more transparent as the farmers knew little about the whole program. For the scheme to continue targeting more farmers it should include more farmers needs such as herbicides, and farming implements and extension services.