Agribank and GIZ signs a Memorandum of Understanding

Zambezi Green Commercial Farm

The deputy minister of Finance, Natangwe Ithete has applauded Agribank for introducing no collateral loan products for both communal and commercial farmers. Ithete was speaking at the local economic revival conference for the maize triangle towns of Tsumeb, Otavi and Grootfontein last week.

The deputy minister highlighted the competitive interest rates offered by the bank and urged local farmers to support the bank through taking out loans and honouring the repayment of such loans. “The bank is not a profit making institution and the little interest that they charge is meant to recoup their operational cost and to ensure that there is money to on-lend to other clients to have a bigger developmental impact”.Ithete also defended the practice of advancing collaterised loans as it encourages loan holders to work hard and produce in order to repay their loans. “Collateral encourages to work hard to ensure that you do not lose your property for non-payment”, Ithete stated.

The deputy minister also defended the turn-around times of the bank, noting that whilst he understand that the loan turn-around times take a bit longer when compared to commercial banks, it is necessary to do proper due diligence to avoid over indebtedness that may lead to the borrower not able to service their loans. “It is only fair that proper due diligence is carried out to make sure that our people obtain loans they can afford and repay to ensure the bank is sustainable. I therefore urge all Namibians and especially the youth to support Agribank in its mandate to promote the growth of agriculture”, he stated.

The conference was attended by the political leadership of the Oshikoto and Otjozondjupa regions, senior government officials, youth and farmers from Otavi, Tsumeb and Grootfontein.

Issued by:
Rino Muranda
Manager: Marketing and Communication
For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332

Upcoming Training Event

Namibia could be de-risked against erratic climatic conditions if it can sustainably tap underground water and create green zones as well as create a national climate resilience fund to smooth out the impact of climate volatility. This is the view expressed by Agribank Chief Executive Officer, Sakaria Nghikembua, at the recently concluded Economic Growth Summit in Windhoek.

Nghikembua explained that the country should exploit underground water resources to create green zones and turn traditional crop fields into all year round grain and horticulture sites. He asserts that through the extraction of water from aquifers in Ohangwena, Oshivelo and eastern Zambezi, in addition to tapping water from the Kunene river and redistributing it throughout the northern regions, could encourage diversification of crops and growing fodder.

Nghikembua also referred to the lack of adequate agricultural statistics for northern communal areas. "We need to establish a credible system of collecting agricultural statistics in northern communal areas and plan on the basis of solid information in respect of livestock numbers and crop yields", he stated. Nghikembua further highlighted the current fragmented coordination of the agricultural sector which leads to split efforts and ineffective impact. The Agribank chief intimated that through national coordination, mentorship and training of farmers should be strengthened to improve rangeland management, crop yields, incomes and deliver a positive contribution to the GDP. He therefore calls for establishment of the Chamber of Agriculture to coordinate improved synergies amongst various stakeholders, most notably the government, agricultural farmers’ unions, financial institutions and donors. He highlighted climate resilience through diversification at farm level as an emerging opportunity to ensure that farmers can maximise their income streams.

Nghikembua is of the view that policy options on value addition should focus on competitiveness and sustainability of primary producers. "We need to ensure access to knowledge and skills, access to productive infrastructure such as irrigation, access to expansive markets domestically, regionally and internationally and that policies aid profitability of value-adders", he noted. According to Nghikembua, the overall policy should include incentives to produce, add value and create jobs rather than to force specific behaviors on producers.

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 has approved loans worth over N$7.1 million for full time communal farmers under the Emerging Retail Financing Product (ERFP). The Bank introduced the ERFP in response to market demand for collateral-free products for full time communal farmers as part of its efforts to widen financial inclusion in addition to the No-collateral product for salaried employees.

The maximum loan amounts for ERFP is N$1 million at varying affordable and competitive interest rates depending on the merits of each business plan. Loans will be granted on the basis of the completion of the mandatory training and mentorship program in the production, management and marketing of the commodities of the undertaking. In addition, the applicants must be available for attachment to the Bank approved mentor.

The ERFP loans target full-time communal farmers already farming in areas such as animal husbandry for livestock farming, poultry farming for raising birds such as chickens, ducks, turkeys and geese, agronomy and horticulture for fruits, vegetables, nuts, seeds, sorghum, maize, pearl millet and mahangu as well as fodder production to supply feed to livestock. Applicants of the ERFP loans are required to submit a comprehensive business plan of which a template is available at all Agribank offices. The ERFP loans will be appraised against new criteria set after the comprehensive review of the product to ensure adequate risk mitigating measures are in place.

The Bank remains committed to implement innovative financing solutions to enhance agricultural production in line with the stated objectives of NDP5 and other national development goals.
Come one, come all to the nearest Agribank Regional Branches countrywide for the product that empowers full-time communal farmers at very competitive interest rates below the prime rate.

Issued by:
Rino Muranda
Manager: Marketing and Communication
For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332
Fax: 061 2074206

Agri Advisory Sevices (AASD) Upcoming Training Events

Agribank's delegation meets with Minister of Land Reform

Agri Advisory Services Division upcoming training events

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.