Agricultural Value Chain Finance Models And Sustainable Industrialisation: Comparative Insights From Zimbabwe And South Africa

Abstract

Agricultural Value Chain Finance (AVCF) models, including contract farming, outgrower schemes, and aggregator arrangements, are increasingly recognised as strategic mechanisms to bridge financing gaps and link smallholder farmers to formal markets in Southern Africa. This conceptual paper synthesises evidence from South Africa and Zimbabwe to examine the structures, benefits, challenges, and sustainability implications of these models. Findings highlight that while contract farming and outgrower schemes provide farmers with access to inputs, credit, technical support, and assured markets, they also face risks related to power asymmetries, side-selling, and gender disparities in land ownership and participation in contracts. Aggregator models enhance collective bargaining and resource access but require improved governance and equitable benefit-sharing. The analysis highlights the crucial role of AVCF in promoting sustainable industrialisation, rural employment, and food security, all of which align with multiple Sustainable Development Goals. As a conceptual study, it proposes an integrative review research design that combines qualitative case studies and quantitative impact assessment as the most suitable methodology for empirically evaluating the effectiveness and inclusivity of these models. Policy and practice must therefore focus on strengthening institutional frameworks, securing land tenure, promoting gender inclusion, and integrating sustainable agricultural practices to harness the full potential of these financing models for inclusive and resilient rural development.