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Your All Season Bank
12 Dec 2018
As the year draws to a close, we reflect on its highlights and anticipate the future. This has been a tough year – one that tested our resilience as a country. The Namibian economy stretched further into a technical economic depression that started in 2016. Since then the economy has registered nine consecutive quarters of negative growth, from 0.9 percent in the second quarter of 2016 to 0.2 percent in the second quarter of 2018. This is the first time that Namibia has experienced such a contraction episode since independence, largely driven by weak performance in the construction, manufacturing, wholesale and retail sectors. In our assessment, the current state of the economy is an outcome of a tight fiscal environment, underscored by sluggish household spending.
Primary agricultural output, which has historically supported the domestic economy, has surprised on the downside. The sector recorded growth of 1.4 percent and -1.1 percent in the first and second quarters of 2018, respectively, in contrast to the impressive growth of 16.5 percent and 21.2 percent recorded in the corresponding quarters of 2017. The minimal growth in the agricultural sector somewhat reflects that favourable prices and trading conditions observed in 2018 could not sustain agricultural output due to the dominance of supply side constrains over demand forces.
The surge in livestock producer prices in 2018 did not attract higher off-take rates as farmers largely focused on herd re-building, resulting in limited marketing stock being made available. Furthermore, the macroeconomic environment has been less supportive of the competitiveness of the agricultural sector.
Specifically, the Namibia Dollar plummeted against the US Dollar by about 7 percent (y-o-y), resulting in a production cost squeeze.
Looking to the future, Namibia’s real GDP growth is expected to marginally improve from a negative growth of 0.9 percent in 2017 to 0.6 percent and 1.9 percent in 2018 and 2019, respectively (BoN, July 2018). The mining and quarrying, electricity, water, transport and communication sectors are expected to support growth, complemented by a renewed focus on fiscal support to strategic sectors. Headline inflation is likely to average 4.3 percent this year, before increasing further to 5.7 percent and 5.4 percent in 2019 and 2020, respectively. Risks to the growth outlook are slow growth and political dynamics in our major trading partners, slow recovery of commodity prices, US policy uncertainty and sluggish domestic consumer spending.
Local meteorological experts predict that the 2018/19 rainy season will receive normal to below normal rainfall in most parts of the country. Given this forecast, we are concerned about the intensity and distribution of rainfall and the subsequent impact these twin developments might have on our customers.
The Namibian economy is faced with structural and climatic challenges. We need to embrace technology to increase production in the primary production and manufacturing sectors through backward and forward linkages. We believe that, policy-wise, these should be the key investment priority areas for the public and private sectors for the economy to rebound onto a sustainable growth path.
Agribank endured a tough economic environment, too. However, the Bank continued to support the agricultural sector through financial and advisory services. We see greater scope for Agribank to contribute to the economic development and betterment of the Namibian society. Towards that end, we strive to be the pillar that investors in the agricultural sector lean towards to grow their businesses.
In the midst of all this, we still see a promising agricultural sector provided it can embrace climate and economic-resilient strategies such as on-farm diversification, effective and on-time marketing and de-stocking, and the use of technology to enhance production. Aligning ourselves to the national strategic plans, the Bank will continue to support the agricultural sector through strategic interventions in the form of financial inclusion, sustainable lending practices, effective loan collections, stringent risk management and stakeholder partnerships.
Interest rates for some Agribank products will see a modest increase of 0.75 percent (75 basis points) effective 1 December 2018. The salary backed no collateral loan product will increase with 1 percent (100 basis points). Notwithstanding the increase in some products, the Government subsidised interest rates will remain unchanged at 4 percent, while penalty interest rate on arrear balances are unchanged at 2 percent. Overall, the Bank’s interest rates remain competitive relative to the market.
Subsidised loans are loans to communal farmers under the National Agricultural Credit Programme (NACP) and resettled farmers under the Post Settlement Support Fund (PSSF). The NACP was established in 1995 for communal farmers to access credit in order to increase food production and become surplus producers, create jobs and alleviate the cycle of poverty. It also serves as a preparatory stage for small scale farmers in communal areas before they could be considered to qualify for the purchase of commercial farmland under the Affirmative Action Loan Scheme (AALS).
The new interest rates per loan type are indicated in the table below:
Short term loans
Medium term loans
Long term loans
NACP non-production loans
NACP production loans
Post resettlement support
Bush control loans
No Collateral loans
Existing and prospective clients of Agribank are hereby informed of the change in interest rates.
In a seamless transition which
represents change with continuity, Minister of Finance Calle Schlettwein
recently appointed a new Board of Directors for Agribank. The new Board’s term
runs from 1 September 2018 to 31 August 2021. The new Board is led by Michael
Iyambo as Chairperson, with Dagmar Honsbein as Deputy Chairperson. Honsbein
also chairs the Finance, Risk, Audit and Compliance Committee (FRACC). Other members
of the five-member Board are Dr Michael Humavindu, who chairs the Credit and
Investment Committee (CIC), Phanuel Kaapama who chairs the Human Resources
Committee (HRC) and Peyavali Hangula. Hangula serves on the Finance, Risk,
Audit and Compliance as well as the Human Resources Committees.
Two of the previous directors,
namely former Board Chairperson Terttu Uuyuni and Oiva Mahina, who chaired the
Human Resources Committee, retired from the Board and were not available for
re-appointment after serving on the Board for eight and six years,
respectively. Following is a brief profile of each of the new Agribank board
Michael Iyambo is a knowledgeable and successful commercial farmer, with
a focus on horticulture. Iyambo’s successful farming business resulted in him
receiving the following awards: Namibia Business Awards’ Award for Excellence
(2011), Large Scale Horticulture Producer of the Year (2014), Freshmark Supplier
of the Year (2016); and his appointment as the Chairman of the National Horticultural
Task Team, Vice Chairman of the Karst Area Horticultural Association as well as
Vice Chairman of the Potatoes and Onions Producers Association (Namibia).
Iyambo was recently appointed as Chairperson of the Namibia Agronomic Board.
His knowledge about the industry, and sound business acumen, provide for
optimum advice on credit analysis. In addition to the Board chairmanship,
Iyambo serves on the Credit and Investment Committee of the Board.
Dagmar Honsbein has fundamental and practical insights in value chain management
as well as financial systems and resources mobilisation for development. She is
equally comfortable in providing professional services at policy and grassroots
levels. Her extensive knowledge in the productive sectors are invaluable as the
Bank gears itself to serve its clients and respond to their needs in an ever-changing
agricultural environment. Honsbein is a fellow in International Marketing from
Reutlingen University in Germany and holds a Master’s degree in Chemical
Engineering and Applied Sciences from Aston University, Birmingham, United
Kingdom; as well as a Master in Leadership in Development Finance, from
Frankfurt School of Finance and Management, Germany and a BSc in Wood
Engineering from the University of Stellenbosch, South Africa. She is a
Certified Expert in Microfinance, SME Finance and Climate and Renewable Energy
Finance, as well as Financial and Managerial Accounting. In addition to
chairing the Finance, Risk, Audit and Compliance Committee, Honsbein also
serves on the Human Resources Committee. With her husband, she farms
commercially in the Khomas region.
Dr Michael Humavindu boasts a strong academic
and professional background in economic research and modelling,
industrialization, MSME development and development banking. Dr Humavindu spent
eight years in development finance at the Development Bank of Namibia (DBN),
where he worked on project finance, deal structuring, credit assessments, and
the design of policies such as the Microfinance Policy and Development Impact
Framework. Presently a Deputy Permanent Secretary in the Ministry of
Industrialization, Trade and SME Development, Dr Humavindu is optimally
positioned to lead discussions and test the Bank’s policies against the fiscal
space, sustainable finance and the country’s economic agenda. Dr Humavindu
holds a PhD in Economics from the University of Umeä, an MSc in Finance and
Investments from the University of Durham, United Kingdom, an MA in Economics
from the University of Stellenbosch, and a Postgraduate Diploma in
Environmental Economics from the University of London, United Kingdom. He
chairs the Board’s Credit and Investment Committee and serves on the Finance,
Risk, Audit and Compliance Committee.He
is a Trainer of Trainers in Investment Appraisal as well as a Certified
Development Banker. Dr Humavindu is an emerging communal farmer in the
Peyavali Hangula is a Chartered Accountant in Namibia and South Africa,
registered with the Institute of Chartered Accountants of Namibia (ICAN). She
holds an Honours Bachelor of Accounting Science (CTA) from the University of
South Africa (UNISA) and a Bachelor Degree in Accounting from the University of
Namibia (UNAM). She completed her articles with Deloitte Namibia and thereafter
was seconded to work for Deloitte in Atlanta, USA, for a period of 6 months to
gain international experience in the field of auditing. Hangula’s work
experience in the financial environment spans over a period of ten years. She
possesses a wide range of skills in the areas of accounting, financial
reporting, corporate governance, internal controls; external and internal
audits a well as in regulatory reporting. Hangula has worked for Standard Bank
of Namibia as a Financial Reporting Manager and as a Regulatory Manager. She
now works for FirstRand Namibia as a Manager: Finance. Part of her community
outreach involves serving as the National Treasurer and Chairperson of the
Finance Committee of Scouts of Namibia. Hangula serves on the Finance, Risk,
Audit and Compliance Committee, as well as the Human Resources Committee.
Phanuel Kaapama is employed at the University of Namibia (UNAM) as a Lecturer
for Governance and Development Studies, where he is also serving as the current
Head of the Department of Political and Administrative Studies. He holds a National
Diploma in Public Administration from the Polytechnic of Namibia, as well as an
MSc. in Development, Planning and Administration from the University of Bristol
(UK). His research interest revolves generally around issues of development theory
and practice. He regularly gives media commentaries on Namibian, African and world
politics; and has published a number of academic papers. Prior to joining the academia
in the year 2000, he worked for the National Planning Commission (NPC) as
Namibia National Coordinator, Capacity Building for Economic Management
Programme on secondment from United Nations Development Programme (UNDP)
Windhoek. From 1997 - 1998 he worked for the Namibia Chamber of Commerce and
Industry (NCCI) as the Head of the Policy and Advocacy Department. His first
formal job was as the Founding Secretary General of the National Youth Council
of Namibia from 1994 – 1997. Kaapama was part of the High - Level Committee for the Preparation of the 2nd
National Land Conference and is also a member of both the Technical Committee
and Negotiating Team in the Bilateral Negotiation with the Federal Republic of
Germany on 1904 Genocide, Apology and Reparation. He also boasts extensive farming
experience in both communal and commercial agricultural
sectors. Kaapama Chairs the Human Resources Committee and also serves on the
Credit and Investment Committee.
Commenting on the new Board, Agribank chief
executive officer, Sakaria Nghikembua, stated: ‘We are excited about the new
Board. It’s a good story of change with continuity. This is a solid Board with
experienced individuals who have established track records. It’s the type of
people we should be having on Boards of public enterprises for progress. The
appointing authority has done an excellent job here’.
Issued by: Sakaria Nghikembua Chief
Executive Officer For
enquiries, kindly contact the Marketing and Communication Division at: Tel.:
061 2074332 Fax.