By Kefiloe Kajane
The government of Lesotho has signed an agreement with Lesotho Post Bank, aimed at helping farmers in the country to secure finance for the purchase of tractors.
Speaking to theReporter, the bank’s head of business banking Khauhelo Ramakongoana said the initiative began last week and farmers have shown great interest.
He said the bank realised that many farmers could not afford or qualify for the standard lending criteria that is why the bank established the criteria that will suit them.
He indicated that many farmers who will be financed will be expected to pay back the money in a period of five years.
Last week, the bank signed a memorandum of understanding with the ministry of finance (as guarantor) and ministry of agriculture and food security under a partial credit guarantee scheme.
This is whereby the bank will advance vehicle finance specifically for the purchase of tractors and their accessories to eligible borrowers at the preferential interest rates as agreed.
In a recent statement by the bank, the bank stated that the guarantor will open an investment account with the bank and deposit an amount of up to M50 million in it. The account will hold the partial credit guarantee facility funds, and once opened, the guarantor shall not have access to the funds until the duration of the tractor and its accessories finance advanced to the borrowers has lapsed with no outstanding fees pending.
Lesotho Post Bank explained that out of the M50 million that the guarantor would have deposited with it, farmers will be provided with 30 percent as subsidy on the total cost of the tractor and its accessories to help keep the price of the tractor and its accessories at affordable.
“Farmers will make a (written) request /application to the bank and upon due diligence, the bank will submit a recommendation letter to the office of the deputy principal secretary at the ministry.
“The bank is under the obligation to assess affordability to ascertain whether the borrower qualifies for a tractor and its accessories finance in accordance with this agreement in conjunction with the bank’s policies and processes,” the statement read.
Ramakongoana explained that documents that are needed for the farmer to apply are a letter from the farmers’ resource centre, the letter written to the bank by the district administrator’s office and the quotation of the tractor the farmer is looking for. He said then the bank will assess the application of the farmer.
