Despite agriculture being the backbone of the country’s rural economy, access to finance remains one of the most pressing challenges faced by smallholder farmers—particularly those practicing conservation agriculture in districts such as Leribe and Butha-Buthe.
Without meaningful access to credit, insurance, and extension services, many Basotho farmers are unable to invest in the technologies and infrastructure needed to boost productivity and build climate resilience.
This issue was brought to the fore at the recent Agricultural Productivity Programme for Southern Africa (APPSA) Conference, where researchers Brian Muroyiwa and Letlotlo Mathaha presented compelling findings on the persistent financial and institutional barriers facing the sector.
Their study shows that while Southern Africa has seen modest improvements in agricultural financing, Lesotho continues to lag behind.
“Agricultural finance programs across Sub-Saharan Africa have seen modest success, but challenges remain in ensuring inclusivity, transparency, and sustainability,” Muroyiwa noted.
For many Basotho farmers, the lack of credit and insurance limits their ability to purchase quality inputs, adopt modern technology, and prepare for climate shocks.
Muroyiwa and Mathaha’s research echoes earlier studies—such as Abiodun A. Ogundeji’s 2018 analysis—which found that access to credit in rural Lesotho is heavily influenced by factors such as household income, land ownership, farming experience, and participation in farmer associations.
Their findings also revealed that:
- Farmers with greater experience and land ownership are more likely to access formal credit due to lower risk profiles.
- Higher-income farmers often avoid credit altogether, opting to fund their operations independently while benefiting more from extension services.
- Key barriers to credit access include high interest rates, lack of collateral, and poor financial record-keeping.
“Occupation, household income, farming experience, land ownership, and access to agricultural extension play crucial roles in decisions regarding credit utilisation and since farming experience is a key factor in determining both productivity and output, it also facilitates access to loans,” the researchers said.
Public extension services, which are critical for farmer education and guidance, the researchers noted are often overstretched with farmers citing a lack of motivation among officers, logistical challenges, and high farmer-to-officer ratios.
“The very system meant to support farmers is, in many cases, part of the problem,” the study warns, calling for urgent reforms to strengthen public extension systems and improve knowledge transfer.
One of the study’s strongest recommendations is to promote farmer-based organisations and cooperatives, which have shown great success in enhancing bargaining power, improving access to finance, and facilitating shared resources across Southern Africa.
The researchers also urge private financial institutions to create micro-credit products tailored to the needs of smallholder farmers, taking into account their risk profiles and seasonal income flows.
Digital tools, such as mobile-based advisory platforms, are seen as game-changers in improving access to finance and information.
Lessons from countries like South Africa and Zambia—where blended finance models and mobile subsidy systems have been successfully implemented—could offer useful insights for Lesotho, the study stated.
“In South Africa, the Land Bank offers blended finance options to emerging farmers, while Zambia’s e-voucher system enables smallholders to access subsidised inputs via mobile money,” the researchers explained.
“Lesotho could greatly benefit from adapting similar models that embrace digital integration and inclusive financial design,” Mathaha added, noting agriculture must work for the farmer, not the other way around.
“Without addressing the core financial barriers, we risk leaving our most vulnerable producers behind.”
