Default loans repayment detrimental to Agribank’s operations

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By Timo Shihepo

Namibia’s Agricultural bank (Agribank) has urged farmers who benefited from the bank to repay their loans so that the Bank would be able to assist more farmers.

The plea comes at a time when the government’s subsidy to Agribank continues to decline as the country continues to experience financial and economic headwinds, compounded by the adverse climatic conditions.

Agribank is a bank mandated by the Namibian government to advance money to persons or financial intermediaries to promote agriculture and activities related to agriculture. However, lately, the Bank has been unable to execute this function effectively not just because of the declining subsidy but because many farmers are refusing to pay back the loans.

Agribank Board Chairperson, Terttu Uuyuni said this in itself poses new challenges to Agribank in terms of its funding strategy, which requires a paradigm shift in accessing affordable financing for on-lending purposes.

Speaking at the Agribank stakeholders’ dinner held outside Mariental at the Hardap Dam Resort recently, Uuyuni said that one of the ways to ensure that the Bank is financially sustainable is to make sure that money advanced to clients are collected timeously to enable the Bank to further on-lend such money to new clients or existing clients who want to expand their operations.

She said that another way, is to raise capital on the market which, given the current economic conditions, will not come cheap. 

It is for this reason that the Board approved an arrears collections strategy, which was implemented with effect from February 2017. This strategy was, however, met with anger with farmers who even went to demonstrate at the bank’s head office, recently. Uuyuni said with this strategy, to date, the Bank has made good progress in collecting the arrears.

The Bank Chairperson has nonetheless said that they have met with the leadership of the concerned farmers and jointly with the Ministry of Finance.

She said the message has been very clear ever since, and that Agribank is willing to listen to the individual clients with the view to agree on specific repayment agreements that are tailored to the circumstances of each client.

“It is therefore categorically not true to state through the media that the Bank is refusing to meet farmers.”

The stakeholders’ dinner event was attended by representatives of the Namibia National Farmers Union, the Namibia Agricultural Union, local political leadership, key selected clients, heads of departments of various state owned enterprises as well as Agribank staff, management and Board members.

It is part of the on-going stakeholder engagement initiatives which the Board initiated in 2017.

Meanwhile, the Agribank Board also visited a number of clients in the communal, commercial and corporate segments of the market to get first-hand information on their farming activities in the Hardap region.

The Agribank team also attended the handing over ceremony of the rural dairy farmers program in collaboration with Namibia Dairies. Five beneficiaries of this program each received three heifers and fridges to keep their milk or milk products refrigerated.

Agribank financed  N$20 million to Namibia Dairies in February 2016 for production, implements and water infrastructure and one of the conditions was to have a rural dairy development program.

Whilst addressing their nutritional needs, the initiative will also create further employment opportunities in their communities and food security at a household level.

At the occasion, Agribank Chief Executive Officer Sakaria Nghikembua said financing value addition can sustain businesses in the agricultural sector and help to expand operations, while creating new employment opportunities.

“Therefore I am appealing to local farmers and entrepreneurs to develop bankable business plans in order to value-add local produce and approach Agribank for funding,” he said.

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