Central Data Catalog

Citation Information

Type Working Paper
Title Status of Agricultural and Rural Finance in Botswana
Author(s)
Publication (Day/Month/Year) 2012
URL http://www.finmark.org.za/wp-content/uploads/2016/01/Rep_statusofARfin_BOT.pdf
Abstract
Most of Africa is predominantly rural, with poverty more pervasive in rural areas and the agricultural
sector making the largest contribution to GDP in many countries. For example, Bryceson (2000)
observes that
• a little over 70% of the Africa’s poor live in rural areas, where the extent and severity of poverty
are greater than in urban areas; and
• within rural areas, agriculture is often a key component of the local economy, and is particularly
important for the livelihoods of the poor, notwithstanding increasing evidence that own account
agriculture often contributes less than 50% to poor rural people’s incomes.
The above suggests that in many African countries, development will be largely dependent on
progress achieved in rural development and, specifically, agricultural development. However, many
countries have achieved little progress in agricultural and rural development and this is one of the
main reasons why poverty is still a major problem in much of the continent. Various explanations
have been provided for the poor performance of the rural sector, particularly the agricultural sector.
Key among these is lack of or limited access to rural financial services, including financial exclusion
challenges.
While improving access to rural financial services is crucial to achieving agricultural and rural
development, it would be wrong to conclude that this alone would solve all agricultural and rural
development problems. However, it is sensible to conclude that improving access to rural financial
services would contribute significantly toward removing many of the constraints limiting agricultural
and rural development. Many analysts have noted the difficulty that poor farmers experience in
financing seasonal input purchases for food grain production as a major problem (but not the only
problem) constraining agricultural growth in many parts of sub-Saharan Africa.
Although the problem of lack of or limited access to rural financial services in sub-Saharan Africa is
generally acknowledged, the extent of this problem and the nature of its causes in the SADC region
and in individual countries within the region have not been adequately addressed in previous studies.
Hence, a study was undertaken to examine the current status of agricultural and rural finance in six
southern African countries: Botswana, Malawi, Mozambique, South Africa, Zambia and Zimbabwe.
This report is on one of these countries, Botswana. The purpose is to gain insight into some of the
challenges experienced in Botswana in improving access to rural finance and to propose measures that
may be considered to address the challenges. The focus is on understanding the current situation with
regards to the demand for and supply of agricultural and rural finance in Botswana, in the context of
the rural economy and population patterns more generally. Knowing the current status of access to
agricultural and rural finance is important, but even more important is to explain why the current
situation is as it is and what needs to be done about it. Hence, the report goes further to identify the
factors that may be responsible for the current state of access to agricultural and rural finance in
Botswana. This involves identification of enabling and disabling factors to access to agricultural and
rural finance. The report concludes with proposals for addressing factors disabling access to
agricultural and rural finance in Botswana.

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