GOVERNMENT has been urged to exert more effort in developing horticulture production to ensure the sector’ viability in the long-term.
This was said by Private Sector Competitiveness and Economic Diversification Project (PSCEDP) Project Manager Chaba Mokuku during a seminar organised by the Central Bank of Lesotho (CBL) on Tuesday to explore ways to improve access to finance for horticulture projects.
The seminar, which was attended by CBL officials, financial institutions, representatives of private sector associations and various government ministries, also sought to identify methods to support the economy’s diversification.
According to Mr Mokuku, Lesotho needed to develop a strategy that would take advantage of its competitive advantage over neighboring South Africa even after the conclusion of PSCEDF.
“PSCEDF has undertaken research to study areas in Lesotho with the potential to support a viable horticulture industry,” said Mr Mokuku.
“We have drawn a map that identifies areas with the elements necessary to support the business such as high altitude, excellent soils and access to water due to high annual rainfalls.
“What the maps have shown is the massive potential for Lesotho to engage in commercial agriculture which would give us an advantage of reaping harvests much earlier than our South African counterparts.
“This means that we have the advantage of being able to infiltrate the market two to three weeks earlier than South Africa.”
He urged government agencies to use the map as a guiding tool in assessing the areas suitable for horticulture.
“The map indicates for instance places where the climate is conducive but which lack electricity needed for irrigation purposes,” Mr Mokuku said.
“This can help government, or even an individual planning to engage in business, to see what elements are missing for instance.”
He added that government needed to establish an agency dedicated to developing the horticulture sector in the event that the PSCEDF ends in 2019.
PSCEDF is a World Bank-sponsored project government established to facilitate increased private sector investment by improving the business environment and diversifying sources of growth.
The first phase, a five-year programme specifically meant to improve the public sector, was launched in 2007.
The second phase of the programme took place in 2013 establishing the horticulture project.
The pilot project was implemented on three farm sites based in Thuathe, Qoqolosing and Mahobong.
The harvest consisted of plums, apples, apricots and peaches which were supplied to retailers such as Shoprite, Pick n Pay, Game Fruit and Veg in Lesotho as well as Spar in Ladybrand.
The second phase, which is set to be established in August 2015, will be rolled out on 35 hectares.”
Phase three of the project is scheduled to commence next year, incorporating such value-added processing facilities as canning, juicing and drying facilities.
In her remarks, Acting CBL Governor, Mathabo Makenete, said the apex bank was working towards establishing a credit bureau that would assist businesses better access finance.
“The central bank, in collaboration with stakeholders, has been implementing a number of reforms aimed at strengthening the financial sector for it to be vibrant and facilitate financial intermediation,” said Ms Makenete.
“It has been noted that the country has made significant progress towards improving access to finance. But looking at the recent (World Economic Forum) Doing Business Report of 2015, Lesotho is ranked at 128 out of 189 countries.
“The report indicates that there is still some work that needs to be done under the getting credit indicator.”
She continued: “It is expected, therefore, that the launch of the credit bureau will go a long way towards unlocking access to credit for businesses, thereby improving our international ranking.”
Ms Makenete also urged financial institutions to increase their “risk appetite” for the horticulture sector “for the nation to reap good fruits out of this initiative”.
“The second PSCEDP has played its part in laying a robust foundation, based on research, which proved that horticulture would be a viable business alternative worthy of investment,” she said.
“Working in collaboration with the CBL, the project has laid the foundation. It is now up to the major stakeholders to ensure that this continues into viable business opportunities.”
Bankers Association of Lesotho Chairperson, Mpho Vumbukani, said banks were willing to lend money but could not do so irresponsibly.
“Banks are oftentimes accused of refusing to lend, but in actual fact we are willing to lend,” said Mr Vumbukani.
“What we will not do is engage in irresponsible lending that would put us at a high risk. For banks to fund a project, they need a business plan that indicates the equity contribution to prove the business is sustainable.”
He further noted that the absence of a clear value chain in Lesotho and other developing countries made banks reluctant to fund the agricultural sector.
“There is no clear value chain from the time people plough to when they take the produce to the market,” Mr Vumbukani said.
“So this is what we need to get right and once we can crack the value chain challenge we will get there.”