In 2017 KfW (a German state-owned development bank) received funding from BMZ (the Federal Ministry for Economic Cooperation and Development which is a cabinet-level ministry of the Federal Republic of Germany) and began a co-operation with AATIF (the Africa Agriculture and Trade Investment Fund which is a closed-ended investment company initiated by KfW on behalf of BMZ to increase food security levels in Zambia.
In 2018 KfW and AATIF incorporated a private company - Agricultural Leasing Company Zambia Limited (AgLeaseCo) in Lusaka, Zambia with the objective of bringing access to finance to small-scale and emerging farmers to enable them to spread the cost of mechanisation – a proven method of increasing the productivity of farm land across the world.
In late 2018 AgLeaseCo received its Non-Banking Financial Institution (non-deposit taking) Licence from the Bank of Zambia and started to sign finance leases with credit-worthy (small-scale and emerging) farmers.
AgLeaseCo is now offering its financial services to farmers in every chiefdom, district and Province of Zambia (a country which has a land mass twice the size of Germany). The Company has grown steadily since its incorporation, taking time to spread the word of the benefits of using financial leasing to access productive agricultural equipment. The field team has visited every Chief and Chieftainess to ensure their support for AgLeaseCo’s objective of bringing increased productivity to the farms in their Chiefdoms.
AgLeaseCo has entered into co-operation agreements with the key local franchised equipment suppliers to ensure their support before and after any equipment is delivered to farmers who have been approved for a finance lease. The company has created special financing schemes for not only four-wheel tractors but also for irrigation equipment, cultivation implements, planters and sprayers. In late 2019 AgLeaseCo focussed its mechanisation efforts on women farmers who were using draft power or even manual labour to work their land and launched a special scheme for financing two-wheel tractors which has been partly responsible for women farmers forming more than one third of AgLeaseCo’s total portfolio.
In 2020 the company responded to a plea from Zambia’s Ministries of Economy and Agriculture to increase the domestic production in the secondary agricultural sector by offering finance leasing to the small-scale agro processors to enable them to access equipment such as oil mills, maize shellers and dehullers.
The company is an equal opportunities employer and more than half of the field team is able to count AgLeaseCo as their first employer after graduation.
The management of AgLeaseCo enjoys the support of its board and its shareholders with all parties joining together to help increase the production of foodstuffs in Zambia.
As many farmers are either still unable to afford the repayments on a finance lease or are still not quite ready to make the commitment, AgLeaseCo’s management has decided to offer agricultural services, specifically land preparation, initially in a test area of Mpongwe, to small-scale farmers recommended by their Chiefs and Chieftainesses. AgLeaseCo will purchase tractors and implements from local suppliers and identify and train local operators so that the services being provided are of the highest quality and at a fair market price.
AgLeaseCo’s business model is beginning to produce positive results in Zambia. The model can be replicated and adapted to work in other countries. The shareholders are already considering a business plan for the next country to welcome AgLeaseCo.