Southern African BancABC has secured US$25mn from the Africa Agriculture and Trade Investment Fund (AATIF) to onlend for agriculture.

In total, farmers in five countries will benefit from the loan: Botswana, Mozambique, Tanzania, Zambia and Zimbabwe, where the bank has operations.

The facility will allow the bank to step into transactions along the entire agricultural value chain, “ideally with longer-term funding” says a statement issued by the fund. By making the capital available to farmers, the fund aims to help stimulate agricultural output and production levels across Southern Africa.

“The risk participation initially covers an incremental agricultural lending portfolio of up to US$11mn, with the remainder being extended as senior loan,” says AATIF chairman Thomas Duve. He explains that the risk participation limit may be raised going forward, subject to successful rollout of the programme.

The bank will manage the entire credit assessment and lending relationship with the beneficiaries. Risk on the facility will be shared equally between the fund and the bank.

It is not known yet when the funds will be released.