Agricultural Credit Guarantee Scheme
The year 2024 has been a challenging one for farmers around the country, and Pandamatenga farmers were not spared. The nation experienced irregular rainfall patterns, with most areas receiving below-average precipitation. The inconsistent rainfall has negatively affected crop yields, impacting agriculture in the country. In such situations, farmers face difficulties in maintaining their crops and achieving optimal yields that are required for feeding the nation.
Because of this extreme weather, commercial farmers in Pandamatenga managed to plant only 60% of their fields. Sorghum was planted in most of the fields, but the estimated yields are much below than regular seasons. Total sorghum production for the 2024 season is estimated to be about 10% of the national demand of 60,000 tonnes.
This year was therefore announced as a drought year by His Excellency President Mokgweetsi Masisi.
The Botswana Government has established several agricultural support programs to enhance productivity, and protect farmers from adverse weather conditions. One of the programs that the government created to support farmers is the Agricultural Credit Guarantee Scheme (ACGS) established in 1986. The scheme has since been amended over the years to align it with developments in the agricultural sub-sector, but overall has played a significant role in maintaining farmers in business.
How the Agricultural Credit Guarantee Scheme Works
The ACGS aims to improve access to finance for dry-land farmers by offering credit guarantees to financial institutions, namely, the National Development Bank (NDB), in cases of crop failure due to drought, floods, frost, or hailstorms.
A credit guarantee is a promise by a third party (in this case, the government) to cover part of a loan if the borrower is unable to repay it. This reduces the risk for lenders, making it easier for farmers, especially those in high-risk sectors like agriculture, to obtain credit.
Under the ACGS, the government guarantees loans issued by the NDB for various farming needs:
- Seasonal Inputs: Fertilizers, seeds, crop production fuel, insecticides, pesticides, agro-chemicals, wages, packaging materials, and transport costs.
- Farm Development: De-stumping, land clearing, labor for arable operations, contract ploughing and planting, fencing, draining, and related tasks.
- Farm Machinery and Equipment: Tractors, planters, cultivators, harrows, ploughs, crop spraying equipment, and borehole equipment for domestic use.
To qualify for coverage, adverse weather conditions such as drought, floods, frost, and hailstorm must be officially declared by the President of Botswana. This year, President Mokgweetsi Masisi’s declaration of a severe drought enabled the ACGS to cover up to 85% of loan installments.
At the Chobe Agricultural Show, Jaco Strachan, chairman of the Pandamatenga Commercial Farmers Association (PCFA), expressed his gratitude: “On behalf of myself and the Pandamatenga farmers, I would like to thank you for understanding the hardships we face. Thanks to the 85% coverage from ACGS, we are optimistic about producing the food our nation needs next year. Pula!”
This statement underscores the vital role of the ACGS in supporting farming activities and ensuring that farmers can continue to contribute to Botswana’s food security, putting food on the tables of Batswana.
The Agricultural Credit Guarantee Scheme is not the only program offered by the government to support farmers. Other notable programs are Temo Letlotlo, and the former ISPAAD.
The members of the Pandamatenga Commercial Farmers Association are thankful for these interventions and look forward to a more successful 2024/2025 season, hoping for improved rainfall and better harvests with God’s continued blessings.
