Integrated financing for smallholder farmers in Namibia


Namibia’s agricultural potential can only be realised if smallholder farmers in the country gain access to finance. Access to adequate financing is often identified as one of the key inhibitors to achieving long-term sustainability for Namibia’s subsistence agricultural practitioners, particularly at the smallholder and subsistence-level farmers. These people typically resort to borrowing from community members or pooling resources to make ends meet. There’s a real need to unlock financing for smallholder farmers to give them access to mechanisation and other technologies, but it is of little use helping them buy tractors when they don’t have money to buy seeds and fertilisers. Namibia’s smallholder and subsistence farmers require financing solutions to help them maximise their agricultural output. Below are suggested ways to design integrated financial models for smallholder and subsistence farmers in Namibia.

The establishment of “Communal Agricultural Bank of Namibia” (CABoN). It’s evident that the commercial banks of Namibia, including the Agricultural Bank of Namibia, are reluctant to lend money to communal farmers without collateral security, especially those subsistence farmers north of the redline. Thus, this established bank should aim to fund agricultural projects in the northern and north-eastern parts of Namibia where the majority of smallholder and subsistence farmers operate.

Beyond conventional financing. Failure to provide integrated financing models is partly why the traditional reliance on government funding and other non-governmental organisations have not succeeded in creating real agricultural productivity gains in the country. Relying on commercial banks to solve the problem has limitations, as their regulatory and fiduciary duties require them to adopt a risk mitigation strategy. This, by its very nature, limits the potential scope of clients to larger organisations with established track records. While this makes sound commercial sense, it does not necessarily achieve the broader policy objectives of developing agriculture for food security, job creation, and community welfare reasons.

Support subsistence farmers through grants. Sadly, today Namibia imports more than 80 percent of its agricultural products from South Africa and European states. The Namibian government should really invest more in subsistence farmers in order to help them farm on a large scale production to boost our country’s food security.

A holistic approach. In short, integrated financing means looking at the entire supply-chain financing arrangement, from the seed and fertiliser right up to the tractor. One cannot simply sell or borrow a subsistence farmer a tractor and expect that alone to improve his or her yield. Subsistence farmers need to be sold an ecosystem, not just a machine; only this would enable that a subsistence farmer becomes a businessperson.

Image credit: Simon Allen from Pixabay