How Basotho livestock keepers and crop farmers find finance
In Lesotho, bank credit for farming remains rare: sheep and angora goat farmers, maize growers and vegetable producers rely mostly on their own savings, savings groups, a few microfinance lenders and, for large projects, banks backed by the LNDC guarantee.
Farming that employs many but produces little
Agriculture accounted for only about 7% of GDP in 2021 but nearly 44% of jobs. Eroded soils, droughts and frost in the highlands limit yields, which makes banks cautious when crop farmers come to them for loans.
Wool and mohair, the main rural income
Merino sheep and angora goats in the mountain districts supply the wool and mohair sold for export. This shearing income, received once or twice a year, shapes how much Basotho livestock farmers are able to repay.
Maize, sorghum and vegetables in the lowlands
In the western lowlands around Maseru, Mafeteng and Leribe, families grow maize, sorghum and beans, often on small plots. Greenhouse vegetables and fruit orchards are expanding, and they need financing on a more regular basis.
Access to farmland and collateral
Farmland is usually allocated under customary practice by chiefs and community councils. Without a registered lease it is hard to use as security, so farmers have to offer livestock, equipment or a personal guarantee instead.
The end of a public agricultural bank
Lesotho once had a state agricultural development bank, the Lesotho Agricultural Development Bank, which no longer exists. No specialised bank has replaced it, so farm credit depends on commercial banks and on public or donor-funded programmes.
What the commercial banks offer farmers
Standard Lesotho Bank, FNB Lesotho, Nedbank Lesotho and PostBank mainly finance commercial farms with proper accounts, offtake contracts or collateral. A small family farmer is rarely eligible without some form of outside support.
The LNDC partial guarantee for agribusiness
The partial guarantee scheme relaunched in 2020 covers up to 75% of a bank loan from 200,000 maloti, with a quasi-equity window aimed specifically at agriculture. It therefore suits agro-industrial projects rather than small farms.
Programmes backed by the World Bank
The smallholder agriculture development project, supported by the World Bank, funded matching grants for farmer groups and small agricultural businesses. These programmes change over time, so check with the Ministry of Agriculture which ones are still open.
Microfinance and savings groups in rural areas
For small purchases of inputs or animals, livestock keepers turn to village savings groups and some microfinance lenders. The page on small loans and microfinance in Lesotho presents these players and the precautions worth taking.
Insuring crops and livestock
Droughts, hail and stock theft expose Basotho farmers to heavy losses. Agricultural insurance offers remain limited, and the lack of cover reduces the chances of getting a large loan from a bank.
Matching repayments to shearing and harvest
A monthly schedule suits a livestock farmer paid after the wool sale poorly. It helps to negotiate seasonal repayments or a grace period, and to pay shearing income into a bank account to prove earnings.
Farm credit in neighbouring Botswana
Botswana, a major cattle-raising country, offers other agricultural finance tools backed by better-funded public institutions. The page on farmer loans in Botswana shows how the situation for farmers there differs from that in Lesotho.
Preparing a farm loan application in Lesotho
- Gather proof of farm income: wool and mohair sale receipts, crop sales and bank statements.
- Clarify the status of the land you farm and, if possible, obtain a registered lease.
- Draw up a season budget in maloti covering inputs, labour, transport and expected selling prices.
- Approach a bank, a microfinance lender or a savings group depending on the amount you need.
- Negotiate a repayment schedule tied to shearing or harvest rather than monthly instalments.
- Ask the Ministry of Agriculture about the support programmes currently available.
Costs of agricultural finance in maloti
| Item | Benchmark | What makes it vary |
|---|---|---|
| Bank interest | Prime of 10.75% in early 2025 plus a margin, indicative | Collateral, farm size, sales contracts |
| Microfinance interest | Generally higher than at a bank | Loan term and amount |
| LNDC partial guarantee | Cover up to 75%, fees waived in 2020 | Changes to the scheme |
| Livestock or crop insurance | Insurer's premium where available | Crop type, herd and area |
Supporting documents for a Basotho farm loan
- Lesotho national identity card
- Sale receipts for wool, mohair or crops
- Proof of land occupation or registered lease
- Inventory of livestock and equipment
- Season budget or farm business plan
- Group constitution for a collective project
Why Basotho farmers get turned down
- Asking for monthly repayments when income only arrives after shearing, which causes arrears from the very start.
- Not paying wool sales into an account, leaving the bank with no proof of income.
- Offering customary land without a lease as security, which the bank cannot accept.
- Paying a middleman who promises farm subsidies or free inputs in exchange for an advance.
Lenders to contact
- Letshego Lesotho: Lesotho subsidiary of the Letshego inclusive financial services group, specialising in loans to individuals, including loan consolidation.
- Nedbank Lesotho: Lesotho subsidiary of the Nedbank group providing retail banking services to individuals, including borrowing and credit solutions.
- Nedbank Lesotho: Lesotho subsidiary of the Nedbank group offering personal loans as well as home loans to individual customers.
Questions about farm credit in Lesotho
Is there a public agricultural bank in Lesotho?
No, the former Lesotho Agricultural Development Bank no longer exists. Farm credit now comes through commercial banks, PostBank, microfinance lenders and public or donor-funded programmes such as those supported by the World Bank.
Can an angora goat farmer get a loan?
Yes, provided the farmer can prove mohair sales income, ideally with receipts and a bank account. Lenders look at herd size, sales history and the ability to repay in step with the shearing seasons.
Does the LNDC guarantee apply to small farmers?
The scheme targets loans of at least 200,000 maloti submitted by a participating bank. It therefore mainly suits agro-industrial projects or commercial farms, and much less the small family farms found in the mountains.
Will a Basotho lender accept sheep or goats as security?
Some lenders are willing to take livestock into account, but its value fluctuates and the risk of theft is high. Banks prefer a registered lease, identifiable equipment or a guarantor, possibly combined with herd insurance.