Investors from the UAE are close to signing a deal to set up an agricultural bank in Pakistan to provide credit for farmers, according to Pakistani officials.
At the Middle East-Pakistan Agriculture and Dairy Investment Forum, recently held in Dubai, Pakistan's Federal Minister for Privatisation, Investment, Ports, Shipping, Industries and Production Syed Naveed Qamar invited UAE companies to set up an agricultural bank in his country and to participate in the privatisation of Zarai Taraqiati Bank Limited (ZTBL) and the SME Bank.
Pakistani diplomatic sources in Dubai, who did not wish to be named, confirmed to Emirates Business that several agreements and memorandum of understandings were signed at the event to enhance UAE investment in Pakistan's agricultural sector. And they indicated an agricultural bank funded by UAE sources was likely to be announced soon.
The proposed financial institution would help farmers obtain agricultural credit to fund tractors and other agricultural machinery, establish irrigation projects and set up diary farms and orchards.
Bilal Pasha, commercial consul at the Pakistan Consulate in Dubai, said the establishment of such a bank was part of the agenda of the forum. He said 10 UAE companies that have already invested in Pakistan's agriculture, livestock and diary sectors have agreed to expand their operations.
Pakistani government officials have also invited UAE investors to participate in the privatisation of Pakistani banks, including ZTBL – formerly the Pakistan Agricultural Development Bank of Pakistan. The bank specialises in the development of Pakistan's agricultural sector through the provision of financial services and technical expertise. ZTBL was incorporated as a Public Limited Company on December 14, 2002 and it currently provides loans for irrigation, diary farms, pesticides, fertiliser and even labour charges. It has a strategic partnership with Pakistan Dairy Development Board to improve milk production in Pakistan.
A report from the State Bank of Pakistan said it aims to increase agriculture credit outreach levels from 1.6 million to 3.3 million farmers in the next three to four years. The State Bank report said a number of small farmers are currently unable to use the bank's services – mainly due to inappropriate documentation such as a lack of passbooks – and the bank hopes to increase its outreach.
History of support
UAE-based companies have a history of supporting Pakistan's privatisation programme. Al Futtaim Industries has been successfully running Al Ghazi Tractors Limited, the largest tractor producing firm in Pakistan, since a privatisation bid in December 1991. Now 50.02 per cent of shares of the company are held by Al Futtaim Industries and 43.17 per cent of shares by CNH Global NV, with whom Al-Ghazi Tractors Limited has an Industrial Collaboration Agreement for manufacturing New Holland brand tractors until April 2016. Most of the tractors made by the company are sold through bank loans from ZTBL.