News & Media

Frequently Asked Questions on Drought Relief Interventions

1. WHAT IS THE DRIs?
Drought relief interventions implemented by Agribank are aimed at assisting farmers to cope with the drought situation and mitigate the undesirable impacts of the drought on production performance and income, with the view to safeguard the performance of the Agriculture sector and the financial performance of the Bank.

2. WHAT ARE THE SPECIFIC DRI INTERVENTIONS?
(a) Installment relief and loan term extension of up to 2 years. This requires a client to make payment of 60% on installment due and 45% of the total arrears, if any. If the client does not have arrears, the he or she only needs to pay the 60% portion of the installment. If the client has arrears, the he or she needs to pay both the installment and arrears portions. The remaining installment and arrears balance is capitalized over the remaining loan period plus a loan term extension of up to 2 years.
(b) Drought relief loans with one year grace period. This facility is available for short-term, medium-term and long-term loans to help the client to meet immediate needs for fodder, water and adaptations needs such as wood and charcoal production to help generate on-going cash flows in these difficult times. Loans are given with a grace period of one year and they are subject to normal bank interest rates and credit requirements. Short-term loans are repayable over 3 years; medium-term loans over 5 years; whilst long-term loans are repayable over 8 years.
Note that the 1 year grace period in not included in the specified loan term periods; however, interests will be capitalized during the grace period. Details can be obtained at our offices.
Exclusions: Loans for purchase of tractors, farm vehicles, delivery vans, farm land and livestock purchase are excluded from the drought relief loans but will be treated under our normal product loans.

3. CONSIDERING A ONE–YEAR GRACE PERIOD UNDER THE DROUGHT RELIEF LOANS, CAN I ARRANGE TO START PAYING INTEREST DURING THE GRACE PERIOD? 
Clients can decide to start making payments towards interest during the grace period.

4. WHAT HAPPENS TO NORMAL AND PENALTY INTEREST ON MY LOAN ACCOUNTS IF I HAVE BEEN APPROVED FOR DROUGHT RELIEF ASSISTANCE? 
Normal interest will continue to accrue on clients’ loan accounts. If the client is successful with the arrears and installment relief, this means the balance of their arrears and installment will be capitalised. This then means the client will no longer be in arrears and penalty interest will therefore not apply. Whatever penalty interest is accrued up to the time that the relief is approved will be part of the amount that will be capitalised.

5. ARE THERE ANY COLLATERAL REQUIREMENTS AND WHAT ARE THE APPLICABLE INTEREST RATES 
For collateral-based loan products, collateral cover is a requirement for both drought schemes: (1) installment relief and (2) drought relief loans and the normal interest rates of the Bank will apply on the drought relief loans. This is so because the Bank does not have the option of raising cheaper money to lend for drought relief purposes.
Through the new loan contracts for both schemes, the client shall commit to revaluation of the collateral. Revaluation may or may not be necessary. It all depends on the current value of the client’s existing collateral with the Bank and how that compares to the new outstanding amount once relief has been provided to the client. Revaluation is to be done later after signature of the contract to reduce the turn-around time. For the purposes of approval of payment relief or the drought relief loans, a desktop valuation will be done by the bank. At the same time, clients are expected to sign the Power of Attorney for the registration of additional bond after revaluation of the collateral if this becomes necessary. Registration of an additional bond over the collateral will only become necessary if the new outstanding loan amount becomes higher than the collateral bond already held by the Bank for the particular client.

6. WILL THE LIVESTOCK INSPECTIONS STILL BE CARRIED OUT ESPECIALLY FOR CLIENTS THAT WOULD LIKE TO APPLY FOR DROUGHT RELIEF LOANS FOR THE DRILLING OR REHABILITATION OF BOREHOLES?
For existing clients, livestock inspection will be exempted to speed up the loan cycle. However, clients will be expected to submit the latest herd statement. For new clients and in cases where farm inspection is deemed necessary by the bank, the normal inspection process will be maintained.

7. HOW DO I QUALIFY TO PARTICIPATE IN THE RELIEF SCHEME? 
Clients participate in the scheme through a partial payment of at least 45% on arrears and 60% of installment due at the time of application. Legal clients should apply for this scheme directly to the legal services division at the Bank’s Head Office. The contact details of the relevant people are part of this document and can also be obtained at any branch. If a client is unable to raise the minimum partial payment above, the Bank is prepared to enter into discussions to agree on an acceptable partial payment level with them. Where legal actions have been instituted against a client, the repayment arrangement should be made an Order of Court; such process should be handled by the legal services division. Subject to the down payment specified above and the Bank’s credit requirements, all clients are eligible for the drought relief loans.  Clients are required to commit to the revaluation of collateral and registration of additional bond when collateral shortfall is verified.

8. HOW WILL THE BANK TREAT THE FOLLOWING CATEGORIES OF CLIENTS
8.1. Post-Settlement Support Fund Clients o Installment relief: The same conditions that require clients to apply through a partial payment of at least 45% on arrears and 60% of installment due will apply. Collateral requirements for installment relief are not applicable and legal clients should apply for this scheme directly through the legal services division. Drought relief loans with one year grace period: if the client has not used up their entire N$200k allocation through this scheme, they can qualify for a loan on an unsecured basis up to the N$200k limit provided that such clients have made the partial payment of at least 45% on arrears and 60% of installment due. Where clients want to borrow more than the scope available in terms of this scheme, then they would have to provide collateral as such loans will then be made outside the post-settlement support scheme.
8.2. No-collateral salary-backed clients - Installment relief: This option is not available to these clients as they ought not to fall into arrears. In addition, the loan repayment is not dependent on farm income but on salaries. Drought relief loans with one year grace period: All No-collateral salary-backed clients can apply for the drought loans, subject to salary scope and repayment ability.
8.3. Clients with unsecured loans o Installment relief: clients qualify for the installment relief, subject to partial payment on installment due and arrear balances at the time of application.
o Drought relief loans with one year grace period: these clients qualify for the installment relief, subject to partial payment on installment due and arrear balances and full collateral cover.

9. WHAT IF THE REMAINING TERM OF MY LOAN ACCOUNT(S) IS OVERDUE OR IF I ONLY HAVE A SHORT REPAYMENT PERIOD LEFT? IN THAT EVENT, HOW LONG DO I HAVE TO PAY OFF MY RE-SCHEDULED ARREARS AND CAPITALIZED OUTSTANDING AMOUNT? 
All clients, regardless of the highlighted scenarios will get a maximum extension period of up to 2 years to pay off the re-scheduled arrears and capitalized outstanding amount.
If this arrangement turns out to be unaffordable to the client, it then demonstrates that the client does not qualify to benefit from the scheme or the client needs to pay in more than the required down-payment thresholds.

10. WHEN DO I START PAYING AGAIN MY NORMAL INSTALLMENTS IF GRANTED DROUGHT RELIEF LOAN? 
For the Installment Relief, clients will be expected to start paying again their normal installment 12 months from the date of signing the contract, irrespective of the repayment frequency.
For Drought Relief Loans, clients will be expected to start paying their installment after the expiry of the grace period. Then the repayment will happen based on the agreed repayment frequency based on the loan-type and the activity being financed.

11. WHERE DO I APPLY? 
New and existing clients are encouraged to lodge their applications for installment relief and drought relief loans at the nearest branch. The legal clients are expected to consult the legal division at the Agribank Head Office (ask for Mrs Evast Kalumbu and/or Mrs Ndinelao Hangula at 061 – 2074200) to apply for the installment relief facility. Thereafter, the client can contact the branch if he/she wishes to apply for the new drought relief loan.

12. HOW LONG DOES THE APPROVAL PROCESS TAKE? 
We expect the approval process will take up to 30 working days.

13. WHO DO I CONTACT FOR MORE INFORMATION ON THE AVAILABLE ASSISTANCE OR TO APPLY FOR RELIEF? 
Clients or interested farmers are encouraged to contact their nearest branch.

14. WHAT IS THE DUE DATE TO APPLY FOR THESE SCHEMES? 
The window period for Installment Relief is 30 September 2019, while for Drought Relief Loans is 31 March 2020.

Drought Relief Interventions

Agribank offers relief to farmers as national drought emergency is declared

Agricultural lender, Agribank, has announced drought relief initiatives in an effort to offer relief and support to farmers countrywide.
The relief comes in two forms:
The first intervention is a payment relief on both arrears and instalments for the current year. The bank has announced that clients who are in arrears will be required to pay 45 per cent of their arrears after which the remaining arrears will be capitalised. An additional two years will then be added to the client's loan period in order to give them more time to repay the remaining amount. Capitalisation of the remaining arrears effectively means that the client will no longer be in arrears unless they fall into arrears again in the future. Once a client has settled the 45 per cent of the arrears, they will also be delisted from the credit bureau if they are currently listed by the bank. The bank has further announced that it recognizes that clients might not be able to pay the required 45 per cent in one go, so clients can pay off this amount in manageable amounts until 30 September 2019. Meanwhile, clients wishing to make use of this relief effort would be required to sign an agreement with the bank and the capitalisation of the remaining arrear and the credit bureau delisting will be effected once the agreed payment has been made.

Similarly, clients who anticipate that they will not be able to settle their annual instalments in full for the current year will be required to settle 60 per cent of the instalment due, with the remaining 40 per cent being capitalised. As with the arrears payment, an additional two years will be added to the client's loan period to make payment more affordable over time. Clients who may have difficulty meeting the payment requirements above are encouraged to make contact with their nearest branch to discuss possibilities. The bank is committed to ensuring that all clients who wish to take up the offer are assisted after consultations with the bank. Chief executive officer of Agribank, Sakaria Nghikembua, emphasised that no client should be turned away on the arrear and instalment payment relief option but that the client and the bank should engage where peculiar client circumstances exist. For this reason, the bank has set up a ‘war room’ at its head office where branches can immediately refer issues or queries they cannot resolve.

The second intervention is drought relief loans. The bank states that these loans will be offered to clients who have fulfilled the payment relief requirements and can be used for various drought related needs such as the purchasing of fodder, the drilling of boreholes or rehabilitation of boreholes or other water infrastructure, adaptive income streams such as wood and charcoal production and bush-to-feed-making equipment. Clients who qualify for the drought relief loans will receive a one-year grace period before they start with their repayment. The repayment periods for the loans after the grace period, as well as the interest rates charged, will be in line with the existing product terms of the bank.

States Sakaria Nghikembua, chief executive officer of Agribank, 'we are facing challenging times for both our clients and the bank. We want both to survive. We are trying to balance so many considerations to ensure our clients receive some scope to make it through this difficult period. We certainly wish we could do more but resources are limited. For the bank, our main source of funds is loan repayments by our clients. This means that total repayment relief is unfortunately not an option at this stage. But we believe we have done our best to assist our clients. We will maintain a flexible approach in our discussions with each client', adding 'given the urgency of the situation we have set up a war-room to deal with peculiar cases or queries which the branches might not be able to immediately deal with. This team will meet regularly to consider any such requests from the branches and provide feedback within 36 hours'.
The bank remains committed to making a difference in this situation and urges all clients to make use of the interventions being offered. The drought relief options commence on Monday, 13 May 2019. Clients are encouraged to contact their nearest branches for further details.

Issued by:
Sakaria Nghikembua
Chief Executive Officer

For enquiries, kindly contact the Marketing and Communications Division at:
Tel.: 061 2074332
Fax: 061 2074206

Response to questions via The Patriot newspaper

In our latest engagement with farmers from the "previously disadvantaged background" community in response to Agribank‟s formal position against the calls (via the media) by farmers to have collection of loans suspended, allegations have been raised that Mr. Michael Iyambo has been receiving preferential treatment at their expense.

Such allegations as are follows:
1. That the chairperson has a loan with Agribank amounting to more than N$20 million which he is struggling to pay back.
As a matter of policy, the bank does not discuss individual loan account details with third parties including the media as such information is confidential between the Bank and the individual loan holder. However, in this instance, we can confirm that Mr Michael Iyambo, who is also the Chairperson of Agribank Board of Directors, is a client of the bank. From the status of his accounts, the bank cannot classify him as „struggling to pay back his loans‟. The amount being quoted as being the loan advanced to him is also exaggerated. As a matter of policy, the bank treats Mr Iyambo‟s account in exactly the same way as it treats all other accounts. This means that he is expected to repay his loans or, if necessary, make appropriate repayment arrangements which he must honour. We do not have exceptions to this requirement and it would indeed be good to prove factually otherwise.

2. That the chairperson transferred his corporate loan to Bank Windhoek and back to Agribank when he became the chairperson, which got restructured
The bank competes with commercial banks for agribusiness on a daily basis. Towards this end, we have many clients whom the bank takes over from these competitor banks. Before we take over any loan, a thorough credit assessment of the client and his or her business is conducted. First, the branch takes in the initial application and conducts the initial analysis. Then the credit division does its assessment as well. Only after the application has passed that stage would it proceed to the management credit committee, the board Credit Committee and, depending on the amount in line with the financial delegation of authority, the full Board. Mr Iyambo‟s application went through all those credit appraisal loops, and was approved by the Board in 2017.
Mr Iyambo became 2 chairperson of the Board only in September 2018. The entire assessment process was done with the full recusal of Mr Iyambo, as per the bank‟s governance requirements. We wish to point out that Mr Iyambo‟s application was submitted and approved by the previous Board, of which he was not chairman. It is thus false to assert that he moved his loan to the bank when he was chairperson. Mr Iyambo previously moved his loan to a commercial bank because of poor service from the bank. However, the bank challenged him as to why he serves on its Board whilst supporting a competitor. The bank challenged him to at least subject himself to credit assessment and see if he would be successful with his application. We do wish to highlight that employees of the bank, as well as directors, are free to apply for loans from it. When they do, they are subjected to the same requirements and rigour, including full recusal. And the bank has the same repayment expectations of such employees and Board members.

3. That the chairperson was given an additional loan on top of this by Agribank
As you might be aware, Agribank is financing the full value chain of agricultural products and it is very common for one client to have multiple loans with the bank. This is the same with many of our clients specifically because the bank finances different products. For example, a loan for equipment would be different from a production loan or a loan for farmland. The client would thus apply for different loans and all these would go through the same process. All of Mr Iyambo‟s applications were done at the time of move-over. It is disingenuous to want to suggest something extraordinary here.

4. That Agribank allowed him to shift his installments three times and that these loans were not even 100% secured
I am sure the "previously disadvantaged farmer‟ knows the contents of the bank‟s credit policy. Assuming that knowledge, we can confirm that Mr Iyambo‟s application was assessed and approved in full compliance with the bank‟s credit policy. All our clients have an opportunity to be pro-active and request for a shift in their installments to be more in line with their cash-flow generation. This is an option that is well-known by our clients and by our employees, especially those who serve clients in the branches and credit departments. It is thus not an option peculiar to Mr Iyambo. As far as we know, the bank has only approved one installment shift for Mr Iyambo. There are requirements that must be met before such a shift can occur, however, and such requirements had to apply in the case of Mr Iyambo. The bank is not aware of three installment shifts nor has it approved any. Any requests from Mr Iyambo would be dealt with in exactly the same manner as any other client‟s request. Mr Iyambo knows and appreciates this fact; so do all employees dealing with applications of this nature. The bank has gone on record numerous times advising our clients to come in individually and make repayment arrangements that suit their unique circumstances. That call still remains and we continue to be accommodative to our clients who come forth to make the necessary repayment arrangements.

5. That the chairperson is using his influential position to be able to enjoy this kind of leniency from Agribank
This allegation is blatantly false. The bank has relevant governance structures in place to ensure that at all times its interest is not compromised. Such interest supersedes any individual interest. The bank has very clear policies and procedures that guide its operations from loan origination, credit assessment, disbursements and even collections. It is therefore unfortunate that the "previously disadvantaged farmer" is twisting facts and using his imagination to cast aspersions over the image of the institution, as well as over the reputation of the individuals mandated to lead the bank, with the sole hope that some decision-maker would one day believe in his story and hopefully remove the bank‟s leadership that is simply trying under very difficult circumstances to run a well-governed and sustainable organisation that can continue to fulfill its developmental mandate over the long-term. Our resolve is to ensure that Agribank is managed efficiently in a self-sustaining manner so that it can have a much wider and bigger developmental impact in its space and for that we will not tire.

6. Anything else you would like to add?
It is unfortunate that the so called previously disadvantaged farmer goes to the extent of trying to create a false impression that something is amiss and that the bank is providing preferential treatment to a client. Nothing could be further from the truth. Mr Iyambo is simply one of the clients who are trying to respond to the bank's call to ensure their repayment arrangements are in order. It is therefore far-fetched to suggest that a client is treated leniently for being proactive and responsive to the bank's one-going advice. We once again urge our clients, and in particular the so called previously disadvantaged farmers, to invest the same energy, zeal and determination, which they invest in trying to find fault with the bank through false means, to make arrangements to repay their loans. What is required is for clients to respect their commitments and make the necessary repayment arrangements, especially in this challenging year.

Issued by:
Rino Muranda
Manager: Marketing and Communication

For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332
Fax: 061 2074206

Agribank develops business leaders

In line with its strategic focus on employees to develop leadership and management capacity to guarantee business continuity at all times, a group of 22 senior managers completed a six months’ leadership training course. This brings to 36 the number of middle and senior managers who participated in the course which covered aspects such as leading self, leading change, leading others, leading performance and leading engagement. The training aspects were complimented by actual work application in-between the theoretical modules to transform the Bank into a modern institution that is best placed to deliver superior customer service and effectively fulfill its mandate.

Speaking at the certification ceremony, Agribank Chief Executive Officer, Sakaria Nghikembua, noted that the value of any training is in the output of the beneficiaries. Nghikembua reminded the trainees to challenge themselves by asking themselves whether the services provided to clients are now better and efficient and whether the Bank is reaching out to more clients in an efficient manner. The Bank’s Organisational Development Manager Muhindua Kaura noted that "the training program had a tremendous impact on the business from the word go as it was a very practical process and demanded of participants to already apply their newly acquired knowledge and skills in the work environment".

Issued by:

Regan Mwazi
Executive: Marketing and Customer Strategy

For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332
Fax: 061 2074206

Public Lecture on drought management strategies

A number of participants at the recently held public lecture on drought management strategies applauded Agribank for sharing valuable information on possible ways that livestock farmers can deal with the current adverse weather conditions. The lecture, held on Thursday 11 April 2019 in Otjiwarongo by Agribank’s Agri-Advisory Services Division (AASD), was attended by more than 60 part time and full time farmers, all with one common concern – the impact of the current drought on their livestock.

Namibia has endured recurrent drought conditions since 2013, which have affected the drier regions of the country such as the south, west and north-west, although some improvements in rainfall were recorded in 2017. Drought is characterized by a period of insufficient rainfall (far below average/normal) that depletes grazing areas and deprives the soil of sufficient/ moisture, resulting in poor land productivity. Consequently, drought conditions compromise livestock productivity, farm income, and farmers’ sustainable livelihoods.

During drought, livestock conditions deteriorate due to thirst and hunger, and eventual deaths are inevitable. Farmers do not earn much from their livestock as market prices have reduced due to deteriorated animal body conditions and insufficient fodder or grazing to maintain them. Financial burdens become heavier as farmers tend to depend heavily on commercial feed supplements to survive the drought.

AASD’s Technical Officer, Erastus Ngaruka, who conducted the public lecture, implored upon farmers to always have a plan to mitigate the impact of drought on their farming activities. "The most important stage is where farmers have to make decisions for any strategy chosen. Basically, they have three options; Relocate the animals, Sell the animals, or feed the animals, or a combination of these options", Ngaruka explained. According to Ngaruka, when a farmer decides on any or all three options, there are some key questions to be answered so that the decision is economical and not counter-productive in the end.

If the farmer decides to relocate, the following are key considerations: where to relocate and how far from essential services (e.g. markets, inputs), which animals and how many to be relocated, is there sufficient and reliable grazing and water? and what is the duration of your stay at the new place? It is advisable to assess the status of the new grazing area before moving the animals.

If the farmer decides to sell, the following needs to be considered. Which animals and how many to sell? when and where these animals will be sold, is there a restocking plan? how much money is expected from sales and what it is budgeted for. Timing is key when it comes to selling the animals, it is best to sell them while their body conditions and prices are favourable.

If the farmer decides to feed, the following needs to be considered. Which animals and how many needs to be fed? is there sufficient feed and additional money for extra feed? how much costs and for how long is the feeding period? what is your farm fodder flow plan and which are the sources? Drought feeding is most effective when animals are segregated according to their production stages and feeding needs.

Ngaruka reiterated that drought conditions will always vary, and there is no standard recipe to cope with drought. "Every year, a farmer should re-assess his/her farm business in terms of finances, feeds, and ability to survive any drought year," he concluded.

Issued by:
Regan Mwazi
Executive: Marketing and Customer Strategy

For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332
Fax: 061 2074206

Response to questions via The Patriot newspaper

Response to Questions via The Patriot newspaper


1. Farmers from previously disadvantaged backgrounds have complained that Agribank is taking time to declare the drought a national crisis. They are questioning why you are not taking the lead to influence government to make the declaration. Why has the bank not yet done this?
It is not Agribank’s mandate to declare a drought in the country, least of all to declare the drought as a national crisis. It is also not the bank’s responsibility to influence the government to declare the drought or to declare it as a national crisis. The mandate to declare droughts in the country lies with the government. Farmers belong to farmers’ unions and these would be the correct structures which they should use to lobby government for purposes of declaring a drought in the country. The bank’s mandate is to finance agriculture, including initiatives aimed at coping with the drought, such as providing loans for fodder, water infrastructure, irrigation infrastructure, creating alternative income streams such as wood and charcoal production and similar drought-mitigating measures.

2. Secondly, they want the bank to suspend the collection of loans from them till the drought is over. What is the bank’s position on this?
The bank cannot accede to such a request on a wholesale basis. We wish to once again advise our clients to contact the bank and make appropriate repayment arrangements based on their specific circumstances. It is best that such an approach is made early. In an interview with a local newspaper last week, the Agribank chief executive officer indicated that the bank was finalising some drought assistance measures and that these will be announced in due course when finalised. It is however important to under-score that any such measures will be severely constrained by clients’ poor repayment record. The bank does not have access to unlimited cash resources and solely relies on what it collects back from clients to disburse anew. In the absence of such repayments, the bank cannot make new disbursements.

Issued by:
Sakaria Nghikembua
Chief Executive Officer

For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332; Fax: 061 2074206

Agribank’s top leadership pays a courtesy visit to the Prime Minister

Prime Minister Saara Kuugongelwa-Amadhila has urged Agribank to continue with targeted stakeholder engagements with its strategic stakeholders to create a shared understanding about its operations and activities. The Premier expressed these sentiments at a stakeholder meeting held recently between her office, the Minister of Finance and Agribank Board and Management. She noted that Agribank plays a critical role in the agricultural sector as it is “for everyone from senior citizens, ordinary person to a child under the bridge”. Whilst appreciating the efforts of the bank, Kuugongelwa–Amadhila called for synergy between Agribank and Government institutions to ensure the activities are aligned in order to achieve the national developmental goals.

On his part, Agribank Chief Executive Officer Sakaria Nghikembua presented a brief overview on the mandate of the bank, product portfolio, farmers training and mentorship, financial status, available funding options as well as corporate social investment of the Bank. Nghikembua highlighted some of the challenges facing the Bank and possible solutions as well as the role that it plays in the country’s land reform process. “We have many social responsibility programs and one of them is that we are currently having four students on our bursary scheme, we also offer training and mentorship to farmers among others,” he said. According to Nghikembua, Agribank can be the center of enabling land reform in the country and transformation of agricultural sector in general, if sufficient support is provided by the relevant stakeholders.

The stakeholder meeting was attended by the Prime Minister, Minister of Finance, Calle Schlettwein, Executive Director in the office of the Prime Minister I-Ben Nashandi as well as AgribankBoard and members of Senior Management. The meeting was held as part of Agribank’s stakeholder engagement strategy which employs multiple engagement methods including one-on-one meetings with strategic stakeholders.

Issued by:

Sakaria Nghikembua
Chief Executive Officer
For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332
Fax: 061 2074206


Caption:
Agribank CEO Sakaria Nghikembua, Board member Dagmar Honsbein, Agribank Chairperson Michael Iyambo, Prime Minister Saara Kuugongelwa-Amadhila, Finance Minister Calle Schlettwein, Board members Peyavali Hangula and Phanuel Kaapama pictured after the courtesy visit.

Agribank response to questions & issues raised

Response to Questions Raised via the Windhoek Observer
There are various ‘concerns’ allegedly raised by some concerned farmers related to Agribank that have been circulating on various social media platforms. In addition, we have been approached by the Windhoek Observer with questions about similar issues to which we have provided detailed response.

1) Why is the bank resorting to black listing farmers on the ITC, thereby crippling them financially and how does this address the bank’s efforts to recover its funds?
Listing is done in compliance with, and within the provisions of, the Credit Bureau Regulations as enforced by the Bank of Namibia to which Agribank is required to adhere like any other credit provider. Credit listing is only done as a mechanism of last resort for clients who repeatedly fail to honour their repayment obligations. The debtor is typically de-listed as soon as they have brought their account up-to-date. It should be pointed out that even retailers black list clients for relatively small credit balances, as do micro-lenders and commercial banks. It is the bank’s experience that clients take their repayment obligations more seriously when listed. It is very unfortunate that the bank is forced to take this step in respect of some of its clients who are in arrears. Clients that cooperate with the bank proactively have no reason to be concerned that they would be listed on ITC. In addition, the bank subscribes to ITC and uses this information to do credit checks as part of the approval process. Thus the importance of complete and accurate information provided to ITC by all credit providers cannot be overemphasised.

2) Agribank launched various initiatives to address land ownership imbalances in the country. Does your current aggressive approach in recovering funds owed from black farmers address this initiative?
We must correct the statement. Firstly, the approach we are following cannot be termed aggressive at all. In fact, the opposite is true and the bank is the most accommodative lending institution in the market. Secondly, the reference to black farmers is misleading as all clients are expected to honour their repayment obligations. The bank does not discriminate. Thirdly, you are right that the bank has put substantial commercial farm-land into the hands of previously disadvantaged Namibians, over 6 million hectares having been placed in such hands since independence through the bank’s financing and developmental objectives. The bank continues to play its role in pursuit of this national objective. In fact the bank is heavily reliant on clients repaying their debt to be able to pursue this objective. Simply put, the bank needs the cash inflows to be able to fund new loans at terms far more beneficial than farmers would otherwise have access to.

3) Why has the bank resorted to debt takeovers when black farmers fail to pay what is due and what criteria are you using to identify which debt can be taken over?
If the question is about clients who move their loans from commercial banks to Agribank, the normal credit assessment criteria applies. Many clients looking to move over to Agribank do so because of more favourable loan terms than those offered by commercial banks. Funding clients who wish to move over from commercial banks is not a new practice for the bank as the debt take-over product has been in existence for many years.

4) Farmers are raising concern that the recruitment of three white executives in the bank has worsened relations with them because of the handling of their issue and also allegations these are former colleagues of the current CEO?
It is easy to twist facts. The truth is simple. Firstly, the bank does not follow a policy of racial discrimination in its recruitment practices. Secondly, the CEO does not appoint executives in the bank. These are appointed by the Board following a rigorous recruitment process that delivers the most suitable people for each role. Thirdly, only two of the three people worked previously for the same employer as the CEO. They applied for positions that were advertised, just like others who responded to such advertisements. Fourthly, the credentials of these employees would clearly demonstrate that they are highly skilled, qualified and experienced professionals who are best suited for the roles they were appointed into by the Board. The bank needs the best people to escape the damage of many years; and for it to be sustainable. Fifthly, it is false to assert that these executives have worsened relations with the concerned farmers. The bank’s collections strategy was developed, approved and implemented well before any of these employees joined the bank; and none of these executives is at the forefront of collections. They cannot be made scape-goats. One of these employees only joined the bank in March 2019. How would he have contributed to the worsening of relations with any of the concerned farmers, for example? The bank has, indeed, begun to realise value from the recruitment of these professionals as evidenced in the progress it is making on various critical fronts. Sixthly, the allegation conveniently ignores black executives at the bank and creates an impression of racial imbalance. The CEO is black. The executive for credit is black. The executive for marketing and customer strategy is black. The executive for human resources is a black woman. There are four other people who, though not at executive level by role, have served continuously on the bank’s executive committee over the past two years – something implemented by the CEO. All these people are black – two men and two women. The bank introduced a Women Leadership Development Programme, at the initiation of the CEO and approval by the Board. Over the next three years, women 3 employees will have an opportunity to benefit from a mix of formal training at tertiary education institutions, supervisory and management development training, exposure and attachments at similar institutions and other related interventions. The sole objective of this programme is to develop women leaders in the business so that they are ready for leadership roles at different levels in the bank and in the broader economy. There is a committed budget behind this programme.

5) Of what results has the bank achieved by summoning farmers through the courts?
Instituting legal proceedings against clients is always a measure of last resort. This is only done after a significant time period has elapsed without any positive response from the client or when the client does not honour amended repayment terms or restructuring of the debt that take into account the farmer’s circumstances. Most clients who have reached legal action stage have either settled or significantly reduced their arrears, whilst making firm arrangements with the bank to settle the remaining arrears. Even at that late stage, the bank can and will accommodate clients to ensure that farm land is not unnecessarily forfeited to service their debt.
We have seen, and continue to see, very positive results from these initiatives in improving the bank’s non-performing loan book. Even with the improvement in collections, however, the amounts being collected at this stage are still not sufficient to meet the demand from clients. We could assist more people if the collections were higher but we see this as a journey that has yet to fully unfold. We will continue to focus on ensuring that we improve our collections processes so that we can fund more players across the agricultural value-chain. As we do so, we will continue to be accommodative to our clients who come forth to make the necessary repayment arrangements. We wish to re-iterate that it is not the bank’s primary objective to repossess farms. That is a last resort when all efforts have failed. This outlook informs our approach.

6) What is the mandate of the bank and what distinguishes the bank from other commercial banks in the country?
The mandate of the bank is to finance agriculture. We are a development financing institution and not a commercial bank. We are further differentiated from a commercial bank in that we are not a deposit taking institution, thus we don’t have the same sources of funding as a commercial bank has access to, to grow its loan book. The bank’s funding of its loan book is done through a combination of government funding, repayments from our clients and external debt. External debt however is expensive and is typically higher than our average lending rates to clients. Our interest rates are lower than market rates. Our grace periods tend to be better than those offered by commercial banks. Our payment frequency is more favourable than options offered by commercial banks. But just because we are a development financing institution does not mean clients do not have to honour their loan commitments. The bank is specifically not mandated to write-off debt on arrear clients and can only do so after all legal processes have been 4 thoroughly exhausted. We also provide repayment flexibility and are more accommodating than is the case with commercial banks. No commercial bank will wait for so long before they list a client on a credit bureau or resort to legal proceedings which might entail the selling of a client’s farm. Our mandate is also to be inclusive. We do this by providing loans to communal farmers who might not have fixed property to offer as collateral. In mid-2017, we introduced a no-collateral loan product for communal farmers which has to-date disbursed over N$55 million in loans. We also provide funding to farmers resettled on commercial farmland by the government without requiring collateral. We do this to catalyse the development of agriculture country-wide. In addition, the bank offers free training and mentorship services to farmers throughout the country, which commercial banks do not do. That’s our mandate.

7) The bank has hiked its interest rates twice since the appointment of the current CEO. What is the rationale behind this and are you aware of the impact its having on farmers loan repayments?
Interest rate adjustments need to be de-linked from the CEO. They are simply a business imperative. Needless to say that interest rate increases can only be implemented on approval of the Board following a thorough motivation from management supported by impact analysis. The last two rate adjustments were not the first time the bank has increased interest rates. This has happened in the past and will happen in future. To finance the needs of clients, the bank needs money. Because of the poor repayment record of the bank’s clients generally, inflows from existing clients are not sufficient to meet the demand. This means that the bank has to borrow to partly fund new loans. Such borrowing comes at a cost that is market related. The bank needs to gradually raise its interest rates to reflect that cost of funding. If the repayments were reasonable, none of this would likely be necessary. In the bank’s last audited financial report, the Auditor-General specifically advised the bank to adjust its interest rates to reflect its cost of funding. No institution can sustainably borrow at high interest rates to lend at low interest rates. That’s the rationale.

8) Does Agribank conduct any on-ground assessment at the request of farmers struggling to repay their loans when requested and how many have been conducted this year and last year?
It is not financially feasible for the bank to have its officials drive around the country visiting every farm. Assessments cannot be used as an excuse for clients not to make repayment arrangements. The farmer is in charge of his farming enterprise. What we certainly do is pre-approval inspections and where necessary post-disbursement inspections.

9)
The last time you spoke about a review process for the Affirmative loan scheme. Who is going to make up the panel and are farmers going to be represented?
The Ministry of Agriculture is the custodian of the Affirmative Action Loan Scheme (AALS), which was set up by Cabinet. The bank’s role is to advance loans to applicants in line with the requirements of the scheme. What we have consistently stated is that this scheme needs review – having been established in 1992. Much has changed since then. For one, farm prices have gone up substantially. The deposit requirement on this scheme, for example, has become unaffordable to many applicants. There are other elements of the scheme which the bank believes require review. We have proposed the need for review to the custodian of the scheme. So any questions about participation in the review of the scheme are best directed to the relevant Ministry.

10) What exactly is being reviewed and what are the problems?
In the bank’s assessment, it is the qualifying criteria that require review. There may be other perspectives which other stakeholders are free to bring to the attention of the Ministry of Agriculture.

11) The country is currently faced with a drought. What are the bank’s plans to help farmers?
The bank is closely monitoring developments in weather patterns and vegetation conditions and has been considering relevant options. These will be announced at the appropriate time in due course.

Issued by:
Sakaria Nghikembua
Chief Executive Officer

For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332
Fax: 061 2074206

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