Block farmers fail to repay M74m loan
MASERU — More than 100 block farmers have not repaid the government-guaranteed loans they received from a local commercial bank over the past four years, the Lesotho Times can reveal.
Some of the farmers had defaulted in the repayment of their loans since as far back as 2006.
Each farming season most of the farmers would get additional finance despite the fact that they had not cleared their loans from the previous year.
Most of the farmers have not paid a cent of what they owe while others have repaid just a small portion of the loans.
When the block farming scheme started in the 2006/2007 season, the government’s plan was to provide capital for committed farmers to increase the country’s food security.
In the long run the loan scheme was meant to work like a revolving fund.
But the high loan default rate among the block farmers has instead caused the government to lose nearly M74 million.
Because the loans, all of which were disbursed by Standard Bank Lesotho, were guaranteed by the state, the government was forced to pay up when most of the farmers failed to service their loans.
That meant the government was now paying the bank on behalf of the block farmers whose loans it had guaranteed.
In other words the government was taking money from its coffers that are funded by taxpayers to cover the gap left when the farmers defaulted.
According to a confidential document compiled by the Ministry of Agriculture and Food Security which was seen by the Lesotho Times this week, only 107 farmers of the 230 individual farmers who got the loans had bothered to pay something.
But even those 107, the document shows, have only paid very small portions of their principal loans which in some cases ran into hundreds of thousands of maloti.
The best paying debtor has only paid 10 percent of what he owed.
Others have paid as little as 0.2 percent of their loans.
The report was compiled ahead of the 2009/2010 cropping season.
In it is a list of 123 block farmers who have not paid anything despite getting the loans as far back as 2006.
Assistant Agriculture Minister Ramootsi Lehata is listed as one of the farmers who benefited from the government-guaranteed loans but failed to pay back.
Although it does not say when he got the loan, the report shows that Lehata, who was under the Mafeteng III group, still had not paid the M151 303.20 he received in one season.
The report further says in another season Lehata also got a M90 063 loan under the Maseru III group but again did not pay back a cent of it.
On another list it says Lehata had only paid M8 000 out of another M94 958 that he received, this time as part of the Maseru III group in another season.
Mootsi Lehata, who is understood to be a son to Deputy Minister Lehata, has also been very slow with his loan repayments.
For instance, the report says Mootsi got a loan of M528 162.34 but only managed to pay M37 316.93.
The late deputy leader of the National Independent Party (NIP), Dominic Motikoe, died before he could pay back M28 181.25 that he got under the scheme, the report shows.
All in all only M4 432 832.70 of the M78 202 813.24 that was loaned was paid back.
That means that for every loti that was borrowed the farmers only managed to pay back five lisente.
That outstanding amount that the farmers owed to the bank had to be paid by the government.
According to the report, 48 farmers under Maseru III group have not paid a cent of what they owe.
Together the farmers owed the bank M5 087 511.77, the report says.
The biggest borrower in this group was one farmer called Keketso Hakane who got M368 184.43 but is yet to pay back anything.
Then there is Phohleli Molongoana who got M288 839.38 but has so far not moved to clear the loan.
There are also big debtors like one Mphafi Lehloenya who got M250 884.62 but is yet to pay back.
Seventeen beneficiaries from Mafeteng have not paid back the M2 380 721 they got under the scheme.
The biggest debtor in this group is one Fusi Mosebo who owes M428 923.80 but is yet to start servicing the loan.
There is also one Karabo Melato who has not paid a cent of the M248 696.28 he got from the bank, according to the report.
Farmers from Mohale’s Hoek III owe M1 953 674.04 with the biggest debtor being one Molomo Malebanye who the report says owes M330 902.83.
Sixteen farmers who got loans worth M2 039 350.65 under Berea III are also yet to repay anything.
There are 22 farmers who got a total of M1 384 213.07 under Leribe III but have so far not returned anything.
Six farmers under Butha-Buthe III owe a total of M140 000 but are yet to pay back anything.
Finance Minister Timothy Thahane said “while there were some defaulters most of the farmers have not defaulted because they wanted to but because they had been affected by the 2007 drought”.
Thahane himself is a mentor of 407 farmers from Mpharane that are listed by the report as having failed to repay their loans.
“They suffered a crop failure because of the drought and they told the bank about this,” he told the Lesotho Times this week.
“They then requested that they get more funds to continue their farming while paying the initial debt.
“It must be noted that I as their mentor was not responsible for their loan as had been suggested in some quarters.
“That is not true.
“Mine was to help them organise their books and help them manage their operations.”
Thahane said the group was paying its loan “bit by bit”.
He however admitted that there were still many farmers who had defaulted under the scheme.
The government, Thahane said, has since paid the loans to the bank as it had guaranteed them.
“But that does not mean efforts to recover that money from the defaulting farmers has been stopped,” he said.
The government, he said, was planning to establish a debt collection unit to recover the outstanding loans.
“We want to recover the loans,” said Thahane.
“The idea was that this would be a revolving fund that would benefit more farmers.”
Groups like the one in Mpharane were supposed to have mentors who would oversee their projects.
The late agriculture minister Rakoro Phororo was mentoring one group.
Forestry and Land Reclamation Minister Ralechate ‘Mokose was helping the other group.
There are now allegations that in some cases some of the farmers did not use the loan for agricultural purposes.
An estimated 86 percent of Lesotho’s 1.8 million people live on agriculture which contributes less than 10 percent to the country’s gross domestic product — the sum total of the country’s wealth.
In his budget speech last year, Thahane said agricultural production had declined by 8.6 percent in 2007.
The 2009 annual report compiled by the World Food Programme (WFP), the United Nations food agency, says Lesotho’s agriculture production “has been declining over the years, worsening the country’s food deficit”.
“Because of food shortages chronic malnutrition (stunting) of children under (the age of) five remains the most significant form of malnutrition in Lesotho at 41.7 percent and in districts like Thaba-Tseka the rate is as high as 54 percent,” says the WFP report.
Despite the high default rate, the government says it has no plan to stop guaranteeing loans to block farmers.