The TN Livestock Trust (TNLT), a subsidiary of Lifestyle Holdings, is taking cattle "deposits" at its 540 hectare farm in Featherstone, about 100km from Harare, in a project meant to "make farmers bankable".
In a country that has a large rural population whose major store of wealth is cattle, livestock is also kept for draught power, manure, meat, milk or as a currency with which to pay damages for offences under customary law and to marry. But rural folk have been unable to use their livestock as collateral for borrowing from banks. Under its cattle banking model, farmers can deposit their livestock at TNLT farms, which act as cattle banks, where the livestock will be under the care of experts employed by the bank.
The animals are vetted for diseases and are quarantined for at least two weeks before being released to join other cattle on the farms. When farmers deposit their cattle, they are issued with negotiable certificates of deposit which show the deposit, breed, sex, age, weight and value of the cattle. Farmers will be able to use these certificates as collateral when applying for loans, and they can also either trade the certificates or withdraw cattle of equivalent weight, sex and value.
Although the certificates are not yet being accepted at all banks, the TNLT general manager, Charles Chakoma, said the trust had to negotiate with banks to recognise its deposit certificates and allow farmers to borrow against their cattle deposits. But that is not stopping depositers. After taking 38 cattle deposits last September on a trial basis, the TNLT started cattle banking in March this year and, within four months, the farm had 250 head of cattle besides an additional 86 animals that form part of the project's "capital herd". "We've stretched our capacity," Chakoma said. "We now have to bring in a lot of feed because the grass on the farm is no longer enough for grazing. Some farmers are bringing their whole herds."
The facility will also find favour with new farmers, many of whom have no collateral or title deeds for the land they occupy. The government only issues "offer letters" for farming land – a huge obstacle as banks do not accept these when farmers seek loans. Geofrey Zambe, a cattle farmer in Manicaland, told the Mail & Guardian: "I think this project makes sense because it’s difficult to look after cattle because of lack of grazing land. At times you force children to miss school herding cattle."
The TNLT says livestock banking gives rural folk, who are still largely unbanked, access to capital. "Their lives will change. Children will now go to school as the need for them to stay at home and herd cattle will be met [by the company]," the TNLT says in a pamphlet being distributed.
Attractive interest rate
The M&G asked the TNLT what's in it for them. "When a farmer deposits cattle with us, we improve the genetics of variety through use of pedigree bulls or artificial insemination. This ensures that the next generation is better than the last,” Chakoma said. Asked how the farmers benefited, Chakoma said: "We'll pay the farmers interest. They can choose cash or to add on additional animals to their deposited herd. The interest starts accumulating immediately after the deposit."
He would not reveal the interest but the M&G understands it is pegged at 10%. Most deposits in Zimbabwe's banks are not earning any interest, which makes the rate attractive. In addition to the interest, the farmer also negotiates with the bank about who will own calves born during the deposit period. He said the project was growing and two more farms, in the Gweru and Masvingo areas, would be added before year-end, before being expanded to provinces in Matabeleland. The bank's efforts could be particularly welcome in Matabeleland where a devastating drought last year resulted in the death of 9 272 cattle in Matabeleland South alone.
The country's cattle population declined from 6.8-million in 2000 to the current 5.2-million, according to government statistics. Largely this has been due to deaths from drought and the chaotic land reform programme that has disrupted agricultural activities and hurt the economy for nearly a decade.
"I think the cattle bank is a worthwhile intervention," said Eddie Cross, secretary for economic affairs in the Movement for Democratic Change and a former general manager of the Cold Storage Commission (CSC), once the largest meat marketing organisation in Africa, handling up to 150 000 tonnes of beef and associated products annually. "I think this is very much needed but the problem is the policy environment; there is no security on land ownership and that is not conducive to rebuilding the cattle herd," Cross said.
The TNLT is negotiating with the CSC and some municipalities to lease the farmland that they own. Chakoma said security of tenure was an integral part of cattle farming and depositors often asked for guarantees that the project would not close down due to farm takeovers.