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Agribank takes farms to auction
24 Jul 2018
Two Agribank-financed farms will be auctioned on Friday, 27 July 2018. Both farms are in Otjozondjupa region and have already been advertised in local newspapers. The auctions follow hot on the heels of an announcement by the Bank that it had moved from a soft to a hard collections approach. Commented Sakaria Nghikembua, Agribank's chief executive officer "This is a last resort for us. There is no other option but to execute on the auction. The only thing that can stop the process now is payment of the arrears by the clients before the auction date. In the absence of that, the process will go through to the end".
Nghikembua added that these two auctions should not be seen in isolation but as part of an ongoing series. He emphasised that if clients persistently fail to honour their loan repayment commitments, the Bank will dutifully follow the same route. He added that the Bank had not only geared its internal structures to implement recovery strategies much faster than in the past but has also bolstered its collections efforts by recently adding new law firms to its legal collections panel.
Nghikembua once again appealed to clients to act before it is too late, saying "if a client waits until they are listed or until we have a judgement against them, it is too late. The best is to avoid these two situations by making repayment commitments and making every effort to honour such commitments".
In 2015, Agribank announced that it will launch a no-collateral loan product for full-time communal farmers. In response to the announcement, many farmers submitted their applications. Following a period of refinement which resulted in delays, the bank is pleased to announce that approvals for ERFP loans have commenced, with over N$1.2 million worth of loans having already been approved. The bank currently has loans worth N$25 million on its applications shortlist. These loans are at various stages of credit appraisal. The bank introduced the ERFP in response to market demand for collateral-free products for full time communal farmers. The newly approved ERFP loans were re-appraised against criteria set after a comprehensive review to ensure that adequate risk mitigating measures were put in place for this product.
Agribank wishes to inform the public that priority is first being placed on previous applicants, whose applications are being re-appraised anew to determine viability. Once the bank has dealt with the existing shortlist, it will then invite new applications for this product. Says Sakaria Nghikembua, chief executive officer of Agribank: ‘we are quite excited that this product is back on track following comprehensive review. In the interim, we had introduced the salary-backed no-collateral loan product which is doing very well. The ERFP takes care of communal farmers who do not have full time employment and also have no tangible collateral to offer against their loans. This is yet a further way in which we continue to catalyse the transformation of agriculture in Namibia’.
Over past 18 months, Agribank has requested defaulting clients to make repayment arrangements to settle their arrears. Some clients have heeded this call and have continued to honour their arrangements. Others have made arrangements and failed to honour them. And yet others have made no arrangements and no payments, ostensibly on the mistaken understanding that, being a state-owned bank, Agribank will not repossess their farms. The Bank wants to place on record that it is not its objective to auction any farms except as a last resort.
However, the bank believes that it has allowed for sufficient time to sensitise its clients about the imperative for them to honour their repayment obligations. The bank further believes that it has sufficiently indulged its clients not only to make appropriate repayment arrangements but also to honour such arrangements.
Agribank wishes to inform its clients that it is intensifying its efforts to move from soft to hard collections. This means clients not honouring their commitments will be listed on credit bureaus more swiftly whilst those persistently failing to honour their commitments will have legal action taken against them. A number of files have already been handed over to lawyers for legal action in this regard. The process has also been tightened to ensure that the bank takes legal action against defaulting clients more swiftly than in the past.
Against this background, Agribank once again appeals to its clients to ensure that they pay their instalments when due to prevent arrears; and in the event where a client is already in arrears, to make and honour repayment arrangements to prevent legal action, default judgement and auctioning of their farms.
The sustainability of the bank depends on regular and adequate repayments by clients on loans advanced to them. In the absence of such commitment, the bank will not be able to fulfil its mandate to provide loan financing to existing and new customers to transform agriculture.