P100M UNPAID, P120M OWED

They delivered the grain, but not the paym ent. Now commercial farmers are trapped , owing P120 million to NDB while cash-strapped BAMB owes them P100 million, with interest ticking as the new planting season looms. Staff Writer BABOLOKI meekwane reports

Commer cial farmers are caught between P120 million in outstanding loans to the National Development Bank (NDB) and P100 million owed to them by the cash-str apped Botswana Agricultural Marketing Board (BAMB) , leaving growers facing mounting interest charges as th ey wait for payment for grain already delivered.

The problem stems from a government-backed financing model in which farmers' seasonal loans are secur ed through cession agreements linking the grower, lender and BAMB. Under the arrangement, proceeds from gr ain sold to BAMB are assigned to the lender, which uses the payment to settle the farmer's outstanding loan before remitting any balance to the farmer .

But with BAMB delaying payments by as much as four months beyond its contractual 30-day payment period, farmers' loans remain outstanding even though they have delivered their produce. As interest continues to accrue, growers face the prospect of enterin g the 2026/27 production season carrying debt from the previous harvest.

NDB Chief Executive Officer Ogone Madisa said the cession is a standard banking security instrument designed to manage risk. Under the agreement, a farmer transfers to NDB the right t o receive payment from BAMB to the extent necessary to settle the outstanding loan.

Madisa, however, said the cession arrangement does not compel farmers to supply BAMB.

“The cession itself serves a different purpose; it simply transfers to NDB the farmer’ s right to receive payment from BAMB to the extent necessary to settle the outstanding loan,” Madisa said, emphasising that grain delivery does not legally constitute loan settlement until the funds are received by the bank.

Industry experts warn that the arrangement leaves the sector vulnerable because farmers' ability to settle their loans is dependent on th e financial capacity of a single major buyer.

Patrick Malope, Associate Professor and Head of Agricultural and Applied Economics at the Botswana Unive rsity of Agriculture and Natural Resources (BUAN), said reliance on a single aggregator creates a systemic point of failure.

“Depending on a single aggregator such as BAMB for the sale of produce to repay seasonal loans is not only risky, but it also locks farmers into prices set by the buyer,” Malope said. “When the buyer fails to pay, farmers are left unable to pay their loans, buy machinery, or equipment, exposing them to non-payment, being labelled as unreliable borrowers, and denial of future credit.”

Despite these risks, producers say they have limited scope to seek alternative buyers under the conditions attached to subsidised agricultural finance.

Lucy Hoffman of the Pandamatenga Commercial Farmers Association (PCFA) said government directives govern ing subsidised loans explicitly bind growers to BAMB.

Hoffman said that for the 2025/26 season, beneficiar ies of state-subsidised arable seasonal loans were required to deliver scheduled produce — including maize, cowpeas and sorghum — to BAMB, particularl y those farming within Special Economic Zones (SEZAs).

She said bypassing BAMB could also expose farmers t o price pressure from large commercial millers, which could leverage cheaper, lower-grade foreign grain imports to push down local producer prices.

“T here is a serious concern about the price farmers would receive if they negotiated individually with large millers. Farmers fear that millers would argue that they can source grain more cheaply overseas and use that imported price to drive down the local p roducer price, despite the fact that the quality of grains are usually not the same, for example: local so rghum is meant for human consumption, while it is mainly used for cattle feed overseas,” Hoffman said.

With grain delivered but payment outstanding, f armers argue that they are being penalised through interest accruing on loans whose repayment has been del ayed by BAMB's failure to pay.

Producers said requests for NDB to freeze interest charges once grain had been delivered were unsuccessful.

Madisa said that while NDB sympathised with affected farmers, the bank could not halt interest charges because it als o incurs ongoing costs to fund seasonal lending.

“NDB itself has funding obligations. NDB obtained financing to support seasonal agricultural lending, and that funding attracts interest which NDB must service. The facility is not subsidised, meaning NDB incurs an ongoing funding cost for as long as the f unds advanced to farmers remain unpaid,” Madisa said.

While delivery of grain to BAMB is an important step towards repayment, NDB said it does not constitute repayment itself.

“Until BAMB makes payment and NDB receives those funds, the loan remains outstan ding. As the loan remains outstanding, interest continues to accrue in accordance with the loan agree ment,” she said.

Farmers say NDB has extended the loan repayment deadline to the end of October 2026 and that they have been advised that the interest rate will increase by one percentage point for the additional month.

Madisa, however, clarified that NDB has not formally extended repayment deadlines or introduced penalty rates.

“The pricing applicable to these loans remains unchanged. Any increase in intere st charges relates only to facilities that are linked to the Prime Lending Rate. Such facilities expe rienced a one percent increase following the adjustment of NDB’s Prime Lending Rate from 6.01 to 7.01 percent effective 1 September 2026,” she said.

BAMB C hief Executive Officer Lillian Scheepers acknowledged the severity of the payment backlog, citing inh erited debt, inadequate working capital and structural deficits.

Scheepers said management is working with the Ministry of Lands and Agriculture to impleme nt a comprehensive turnaround strategy, secure private-sector financing and establish pre-arranged do mestic and export offtake agreements for the 2026/27 season.

“BAMB’s responsibility is to provide a reliable market for locally produced scheduled crops, a nd the current payment delays are therefore a matter of serious concern,” Scheepers said.

She added t hat BAMB is negotiating with government authorities and lenders to settle outstanding payments to farmers before September 30.

For commercial growers, howe ver, the longer-term turnaround offers little immediate relief as the September 30 deadline approache s for settling the loans and securing financing for the next production cycle.

“Farmers must settle production loans, pay suppliers and other obligations, and begin preparing for the 2026/2027 planting season. They cannot enter another production cycle car rying debt and interest arising from grain that has already been delivered but remains unpaid,” grain farmers said.

NDB said it is engaging government agen cies, BAMB and growers to negotiate interim financing relief.

“A similar situation was experienced du ring the previous season, where delays in payments by off-takers affected some farmers' ability to settle their loans within the expected timelines,” Madis a said.

Despite these challenges, NDB said it worked with affected farmers and other stakeholders to develop practical solutions that enabled farmers to access funding and proceed with planting for the next season.

“NDB intends to adopt the same collaborat ive approach for the next season. The Bank remains engaged with farmers, BAMB, Government and other r elevant stakeholders to find sustainable solutions that support both loan recovery and continued agricultural production. Our objective is to ensure that t he challenges experienced during the current season do not undermine farmers' ability to participate successfully in the 2026/2027 production season,” she said.