European Investment Bank (EIB) Global and Zambia Industrial Commercial Bank Ltd have signed an agreement to mobilize a combined €30 million (ZMW 767 million) to support private sector development in Zambia’s agricultural sector, the EIB announced. The announcement was made during the ongoing EU-Zambia Lobito Corridor Business Forum in the presence of Zambian President Hakainde Hichilema and EU Commissioner for International Partnerships Josef Síkela. EIB Global will provide €15 million (ZMW 388 million) which ZICB will match under the Agri Value Chain Facility.
The deal will allow for on-lending to eligible SMEs active in the agriculture value chain. It will make it easier for agri-food SMEs to access finance and markets, which in turn will support a wide base of smallholder producers who supply them. The agreement with ZICB is one of three agreements with Zambian banks under the EU-funded Agri Value Chain Facility aimed at supporting SMEs in agriculture and aquaculture value chains. The support includes long-term funding, a risk sharing facility and technical assistance.
“Supporting the growth of agri-food SMEs and smallholder farmers through this financing facility will help Zambia safeguard the progress being achieved in the agricultural sector,” said ZICB Chief Executive Officer Ngenda Nyambe. “Our partnership with EIB Global will enable ZICB to provide affordable financing that creates jobs and supports sustainable livelihoods across the agricultural value chain, in line with the Government’s long-term goal of transforming Zambia into a leading regional agricultural hub.”
At least 30% of the funds will specifically target businesses led or owned by women.
EIB Vice President Karl Nehammer stated that the agricultural sector contributes significantly to Africa’s GDP and is crucial for poverty reduction and food security while being a key driver for trade and job creation.
“We are supporting Zambia to create an environment that is attractive to private sector investment in agriculture,” he said. “The goal is to ensure availability of finance to grow the whole agriculture value chain from smallholder farmers all the way to large enterprises.”
Female farmers in developing countries receive less than 10% of agricultural finance, and in Zambia, nearly half of female-managed SMEs identify access to finance as a top challenge.
The investment includes capacity building for the ZICB team to improve their gender responsive lending strategies and increase outreach in the agricultural sector. The agreement also provides a risk sharing facility of €4 million (ZMW 103 million), supported by a grant from the European Commission, making it less risky for ZICB to lend to SMEs in the agricultural sector often affected by climate change. EIB Global has worked with Zambia since 1978, with over €1 billion (ZMW 25.7 billion) invested in projects across the public and private sectors.
