The Millennium Challenge Corporation (MCC) has approved US$458 million “Farm-to-Market Compact” for Zambia for the 2025 fiscal year.
The program is intended to spark inclusive economic growth in Zambia’s agriculture and agro-processing sectors.
“Compact investments will lower the cost of transporting goods to markets, increase the availability of equipment for small and medium farmers and processors, increase financing for infrastructure projects that support agriculture, and catalyze reforms in the agriculture sector to attract greater investment,” read the press release announcing the compact’s approval.
The program’s budget includes a grant of US$458 million from MCC and a contribution of US$33.75 million from the Zambian government. The compact includes four projects – roads and access, asset finance, agriculture policy reform and institutional strengthening, and the American catalyst facility for development.
It is expected that Investments in these areas will help the Zambian government to substantially diversify and grow the country’s economy through greater private investment while reducing poverty.
This will be Zambia’s second compact after the first one–a US$332 million program that focused on water and sanitation to address lack of water and waterborne diseases and ran from 2013 to 2018.
Agriculture is among the hardest hit sectors by the drought experienced in 2024, resulting in the risk of hunger for millions of the population.
In his national address last week, President Hichilema stated that only 31% of the land area cultivated in the 2023/2024 farming season had been harvested, resulting in a maize grain yield of only one-third of the expected 4.4 million tons and plunging at least 6 million people into food insecurity.
He also announced the expansion of the Sustainable Agricultural Financing Facility in 2025, from the present K400 million to K1.2 billion.
This is intended to promote smallholder farmers’ resilience amid climate change by providing them with affordable financing for mechanization and irrigation to enable them to grow food throughout the year.
The increased funding will also permit additional crops, livestock, and aquaculture to be included in the facility as more financing institutions participate. Hichilema said the participating banks had increased from five to nine, with more expected to get on board.
