Standard Bank to provide US$100 million in loans to African farmers

South Africa-based Standard Bank Group Ltd. is set to provide small-holder farmers and agricultural businesses in Uganda, Ghana, Mozambique and Tanzania with $100 million in affordable finance, leveraged through credit guarantees, the company announced Friday (November 27).

Stanbic Bank Uganda Ltd., a unit of Standard Bank, said the company has already agreed to give US$25 million to Ugandan farmers, and would roll out the rest of the credit to the other three African countries starting next year. Small holder farmers account for the bulk of agricultural production in Uganda, Tanzania and Mozambique.

"African financial institutions have typically avoided lending to smallholder farmers and to the agriculture sector for a number of reasons, including farmers' lack of usable collateral, the high costs associated with servicing remote clients, and interrelated risks such as unreliable rainfall, lack of irrigation, pests and diseases, and price fluctuations," the bank said in a statement.

Standard Bank is trying to simulate a revolution in agricultural lending to boost production and exports, Stanbic Bank said. The group is targeting farmers dealing mainly in crops such as corn, sunflower, barley, rice, sorghum, beans and soy.

The bank has teamed up with the Alliance for a Green Revolution in Africa to mobilize affordable credit to support Africa's agricultural development. AGRA has a target to raise at least $4 billion in credit for the programme.

Of the total, 60 percent of the loans will go to farmers' associations and collections of small-holders organized by agricultural marketing companies, the bank said.

The remaining 40 percent will go to agribusinesses, and agribusinesses of all sizes can access the facility when they have collateral or are creditworthy, it said.