As Zambia intensifies efforts to diversify its economy through agriculture and reduce rural poverty, access to affordable financing remains one of the most pressing challenges facing smallholder farmers, the backbone of the country’s agricultural sector.
Despite agriculture’s significant contributions to employment and food security, thousands of farmers continue to operate outside the formal financial system. This exclusion limits their capacity to invest in productivity-enhancing technologies and scale up production, a situation experts say must urgently change if Zambia is to achieve meaningful rural economic transformation by 2030.
Agricultural expert Dr. Oliver Bulaya has called for urgent reforms to expand rural financial inclusion, warning that Zambia risks slowing progress on poverty reduction and agricultural transformation if smallholder farmers remain unable to access formal credit facilities.
In an interview with Zambian Business Times, Dr. Bulaya noted that the government’s shift toward measuring the effectiveness of rural finance by tangible outcomes, such as increased credit penetration and more farmers accessing financial services, marks an important change in Zambia’s development agenda.
“The success of rural finance initiatives should not be measured solely by the amount of money disbursed, but by how many more farmers in underserved areas are gaining access to financial services,” Dr. Bulaya said.
He explained that for decades, most of Zambia’s smallholder farmers have relied on personal savings, family support, village savings groups, and informal lenders, as commercial institutions continue to perceive agriculture as a high-risk sector.
According to Dr. Bulaya, only about 10 to 20 percent of smallholder farmers currently have access to formal credit, leaving the vast majority financially excluded and unable to invest in vital inputs such as improved seeds, fertilizer, irrigation, mechanization, and climate-smart technologies.
“If meaningful poverty reduction is to be achieved by 2030, Zambia must pursue an ambitious but attainable expansion of rural financial inclusion,” he said, suggesting a target to increase access to formal and semi-formal agricultural finance from the current level of about 15 percent to at least 40 to 50 percent of smallholder farmers.
Dr. Bulaya emphasized that reaching this target will require a major structural transformation of the rural economy and year-on-year growth of 25 to 35 percent in the number of farmers accessing agricultural finance.
Growth rates below 10 percent, he warned, are unlikely to drive substantial poverty reduction due to population growth, climate shocks, rising production costs, and growing investment needs. However, he cautioned that expanding credit access alone will not address all challenges facing the sector.
“Rural finance must be accompanied by strong agricultural extension services, better market access, crop insurance, digital finance solutions, and ongoing farmer capacity-building initiatives,” Dr. Bulaya stressed. Strengthening rural finance ecosystems, he concluded, is essential for unlocking Zambia’s agricultural potential and building a resilient rural economy that can support the country’s long-term development goal.
Article by Francine Chibuye
