GHANZI SHOW - Ministry of Agriculture

Whatever the sector in
the economy, financing
r e m a i n s a h u g e
determinant of success and growth.
The agricultural sector is not an
exception. Over the years, the
country’s agricultural sector has
been a victim of poor financing.
Financial institutions regarded
agriculture as a high risk business,
therefore avoided talking business
with the farming community.
Reasons included interrelated
production risks such as unreliable
rainfall, pests and diseases (outbreaks
of Foot and Mouth Diseases), and
high costs incurred when servicing
remote areas.
However, the country’s agricultural
sector has fundamentally changed
over the past few years, a change
that has affected financing. Most
commercial banks have come on
board and identified agriculture as
an area with huge potential.
As a result, agribusinesses are
becoming financially powerful
and bigger.The challenge though
is that most of the farmers are
doing subsistence farming rather
than commercial. It is therefore
important for financial institutions to
venture into agriculture to promote
commercialization.
For the beef farming sector, this
will create major opportunities that
can allow it to grow. Currently the
off-take rates of South Africa and
Namibia stand at 17% and 14%
respectively while for Botswana is
merely 13%. Botswana’s average
carcass weight is only 175kg while
those of our neighboring countries
such as S.A and Nambia is 220kg
and 180kg respectively. The new
focus by banks will benefit the
beef industry substantially as there
will be pressure for consistency
in application of sound farming
practices like vaccination,
deworming and supplementary
feeding.
Therefore, effective management
becomes essential to the farmer.
The same goes for arable farming;
nowadays, farming has become
highly capital intensive. Production
inputs have become expensive
and lack of proper farming
implements like tractors, planters
and ploughs could hamper efforts
to commercialize. Therefore, banks’
appetite for agriculture is a very
much welcome development by
farmers and the government.
Banks as financiers have taken
a step forward by participating
in the agricultural space through
implementing agribusiness. Stanbic
Bank has developed funding models
that would give small-scale farmers
access to credit.
According to Mr. Kenneth
Makubate, head of Agribusiness
at Stanbic Bank, their bank has
committed itself to the development
of agriculture through innovative
funding which enables small-holder
farmers to maximize opportunities
including the purchase of direct
inputs like seeds and fertilizers.
However, most of their business
is focused mostly on commercial
agriculture. Bank Gaborone on the
other hand had designed insurance
policies targeted at those who
practice organized agriculture like
feedlots.
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