About half of Zambia’s population lives from agriculture. Of these, about 98% are smallholders, the majority of whom cultivate less than 2 ha of land. Smallholder structures are particularly common in Eastern Province. Despite its importance as a major employer, the Zambian agricultural sector is characterised by low productivity. The main reasons for this are labour-intensive and unproductive farming methods due to inadequate agricultural equipment. Many farmers lack the capital to invest in mechanising their farms. This is where the Agricultural Leasing Company Zambia Limited (AgLeaseCo), which is supported by KfW Development Bank, aims to provide assistance. By providing financing in the form of leasing, the private Zambian company helps smallholder farmers who cultivate 5 ha to 20 ha to purchase agricultural machinery and thus modernise their farming methods. The gains made by smallholder farms through mechanisation can be described as substantial: better harvests and land expansion lead to a significant increase in productivity and thus income. In addition, it is possible to react more flexibly to unpredictable climate risks, such as rain that comes too early or too late. Moreover, smallholder farmers who cultivate less than 5 ha of land can also be assisted by AgLeaseCo customers offering agricultural services with their leased machinery for a fee. By using such agricultural services, these smallholders also gain a significant increase in productivity and income. Consequently, the leasing model offered by AgLeaseCo to promote agricultural mechanisation can be classified as a good practice.
Rosenberg et al. (Sun,) studied this question.
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