Smallholder Agricultural Development Project (SADP II) – Matching Grant Programme

Smallholder Agricultural Development Project (SADP II)

Matching Grant Programme

Background: The Ministry of Agriculture and Food Security of Lesotho, with the support of the World Bank has established within the SADP II, a Matching Grants Programme (MGP) to support investment by small and medium agriculture-related businesses, farmers, farmer groups, cooperatives and rural youth seeking to increase climate resilience, raise productivity, improve commercialization and increase production and consumption of high nutrition food products.

 Priorities: The MGP invites applications for investment projects, with a maximum duration of one year, which focus on the adoption and use of appropriate technologies and business initiatives by smallholder farmers and small and medium-scale private agri-business enterprises in Lesotho. These investments should: increase climate resilience, raise farm productivity and improve commercialization among smallholder farmers; increase competitiveness and profitability, increase value-added to local products among agri-business enterprises and increase market opportunities for smallholder farmers; and increase the production, consumption and availability of high nutrition food products.

Eligible investments include:

• Improved seed and seedling varieties for vegetables under shade nets, tunnel houses, drip irrigation, water storage equipment, boreholes and pumps
• Improved piggery production
• Improved broiler production.
• Product collection, storage, post-harvest handling, processing, grading/sorting, marketing, packaging, labelling, brand development, presentation and promotion of agricultural products
• Diversification and introduction of high value-added and niche products.

Grant financing: Two grant windows will be available to applicants: (i) grants for smallholder farmers and farmer groups to support investment in climate smart agricultural technology and other productivity enhancing technology up to a maximum of $US 30,000 (M400 000.00); (ii) grants for small and medium size agri-businesses up to $US 100,000 (M1 500 000.00), to support investment in value added activities including small-scale processing and marketing as well as provision of inputs and services

Eligible Applicants: Applicants with farms and/or agri-business activities operating in all ten districts of Lesotho are eligible for grants. Eligible applicants include a) farmers or farm groups; b) registered cooperatives or associations; c) registered small and medium size agri-businesses; d) registered local, district and national associations and cooperatives; e) sub-groups of registered associations and cooperatives; rural youth; and f) partnerships between the above categories and registered processing/trading businesses in Lesotho. Smallholder farmers, members of farm households, rural youth and small and medium-scale agri-business enterprises will receive priority for grant support but non-farm applicants with demonstrated farming experience and a strong knowledge of the proposed investment will also be considered. Eligible applicants may also submit joint proposals up to the maximum grant stipulated above. Youth under 35 and women are particularly encouraged to apply. Employees of the Ministry of Agriculture and Food Security and Nutrition, Project Financing institutions (IFAD ad World Bank Group) and their direct beneficiaries are not eligible. Persons with an annual income of more than 600 000.00 Maloti and having access to more than 0.1 ha of irrigated land are not eligible to the Smallholder grant window, but only to the Agribusiness window.

Partnership with Service Providers: The potential applicants will be required to form partnerships with a qualified service provider(s). The service provider(s) will (i) provide technical and financial assistance and advice to the applicant to develop the business idea and prepare the application, (ii) work with the applicant to clarify different technical and financial aspects of the activity and prepare an activity implementation plan; (iii) provide technical and financial assistance to the applicant during project implementation and provide the products and services to be delivered according to an agreed schedule; (iv) support the applicant in managing grant funds, including keeping the necessary accounts and collecting contributions from beneficiaries; (v) supervise the inputs of beneficiaries/applicants and sub-contract technical assistance as necessary; (vi) monitor the progress of activities; (vii) support the applicant in the preparation and submission of the required financial and technical reports. Eligible service providers include a wide range of specialists such as private sector technical specialists and business consultants, traders, associations, NGOs and on-going international-funded projects and programs present in Lesotho, as well as university and college faculty, and public extension and research staff outside of normal working hours. Employees of the Ministry of Agriculture and Food Security are not eligible to work as Service Providers.

Service Providers will need to show that they have successfully completed a training program on the preparation and technical and financial analysis of investment projects approved by the PMU or the MGC.

Beneficiary contribution: In all cases, successful applicants will be required to make a co-finance contribution in cash to engender ownership and demonstrate commitment. The larger grants for agri-business enterprises will also be conditional on their willingness and ability to generate employment and build effective supply agreements with smallholder producers. Co-finance cash contributions will vary according to the grant sub-program as follows: (i) Improving smallholder production grants for farmers or farmer groups: grants up to $US 30,000 will require a 20% co-finance contribution; (ii) Agri-business grants for registered agriculture-oriented and privately-owned enterprises, associations and cooperatives: grants in this program will require a 30% co-finance contribution. 100% of the needed matching contribution for both grant categories must be available upfront.

The participation and contribution from different partners should be confirmed by written agreement reached between the principal applicant, the service provider and/or other partners.

Eligible Expenditures under Grant: Of the grant amount, the indicative types of financial support are:

Investment Acquisition, Installation and Operation: This category must comprise at least 60% of the grant amount and may include costs associated with the purchase of improved seed, seedling and livestock varieties; the purchase and installation of equipment for cultivation, harvesting, post-harvest handling, processing, preservation, storage, grading, packaging etc; the construction of necessary buildings for livestock production, storage, processing, marketing; the purchase and installation of tunnel houses, shade nets, irrigation equipment, pumps, boreholes, tanks etc; product development; alignment with national and international food and safety standards; and marketing campaigns. Where the investor is making substantial physical investments, the costs of land surveys will be covered for smallholder farmers in order to ensure that they have secure land ownership as a means to secure the benefits of investment. Agri-businesses will not be eligible for support for land surveys. Land survey costs may not be more than 10% of the grant amount, up to a maximum of $US 2000 equivalent. The costs of land purchase, land lease or land rental will not be covered for any grants.

Non-Eligible Expenditures under Grant: The following items would not be covered out of the grant amount: (a) Salaries or payment for works and services provided to the project by the grant applicants or its members; b) any expenditures made prior to the date of signature of the Grant Agreement or after closure date of the project; c) purchase, rent or leasing of land and existing buildings; d) any expenditure related to operating costs, which are expected to be the direct responsibility of the applicant; e) any expenditure made in territories of any country that is not a member of the World Bank for goods produced in or services supplied from such countries; f) any expenditure with a hazardous impact on the environment.

Deadline and Place for Submission of Applications: The deadline for submission of applications is not later than 17 April 2026. Applications should be submitted in four copies (one original plus three photocopies) and delivered by hand at the District Agricultural Offices in the 10 districts of Lesotho at 12:00 noon. Applications submitted after deadline will not be considered.

Evaluation of the Applications: All applications received within the deadline will be screened by the MGP Secretariat for compliance with the above rules. The successful applications will then be evaluated by specialized Technical and Financial Reviewers and submitted to the MGC review and field verification. The list of successful applicants will be published in SADP II website and social media pages. Unsuccessful applicants will be informed and their original project documents could be returned to them on request.

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