“We need to run a sustainable Bank and not run it down. The Bank needs to continue to assist more people and not just the ones that were assisted in the past.” These were some of the sentiments expressed by Agribank’s Chairman, Michael Iyambo, at the start of Agribank’s countrywide stakeholder information workshops in Windhoek yesterday.

The Bank introduced the COVID-19 relief and stimulus package from 1 June 2020 to mitigate the impact of the pandemic on the clients, while stimulating optimum production at the farm level. The objective of the road show to be held under the theme, “Let’s Talk”, is not only to share information about the stimulus package, but also to clarify issues and leave stakeholders with a better understanding on this matter.

Speaking at the event, Iyambo, stated that the Bank puts a premium on stakeholder engagements and consultations to foster mutual understanding about its operations and activities. He reiterated that the mandate of the Bank is only attainable through sound corporate governance and prudent management of funds. “As a Bank, we need to be sustainable and self-funding, hence our operational model should support sustainability and responsible lending at all times”, Iyambo noted.

According to him, the Bank has a deep appreciation of the challenges facing the agricultural sector, from prolonged drought, dwindling market prices, reduction in its contribution to GDP and of late, the impact of COVID-19. He explained that the stimulus package is an outcome of extensive consultations with key stakeholders from the farmers unions to the shareholder and internal staff members. “Naturally as is the case with consultations – not all proposals put forward by the diverse group of stakeholders emerge in the same format in which they were made.

However, Iyambo emphasised, that the package covers all relevant aspects that have emerged from these consultations; and the Bank endeavoured to come up with a package that is feasible under the current economic conditions, whilst responding to these issues.

He noted that “customers would always want more flexibility and relaxation of requirements, but, as a Bank, we can only do what is feasible and sustainable. Clients must also be prepared to meet the Bank half-way, instead of always demanding a free pass”.

On his part, Agribank’s Chief Executive Officer, Sakaria Nghikembua, who provided a detailed overview on the mechancs of the stimulus package, explained that Government provided a guarantee for the Bank to borrow money for disbursement to qualifying clients in the form of stimulus loans. Nghikembua noted that the guarantee is not a physical transfer of funds from the Treasury to the Bank, but the latter is required to go out in the market to raise these funds – and do so at affordable interest rates. “This is naturally a challenge when you have clients whose payment record is not optimal”, Nghikembua cautioned.

According to him, it was important for the Bank and the shareholder to set minimal conditions, to ensure:
i)Financial sustainability through securing minimal cash inflows into the Bank during the relief period;
ii)That the Bank is able to carry out its mandate by honouring its commitments to clients whose loans have already been approved prior to the outbreak of COVID-19; and to assist new and repeat clients who need assistance throughout this period – including women and youth who face a high rate of unemployment in our country;
iii)The Bank continues to stimulate the agricultural sector through new loans extended.

The Agribank chief is therefore appealling to clients to embrace the COVID-19 relief and stimulus package and to take advantage of the various relief measures it offers. “It is a fair, reasonable and practical offering – balancing the interest of the tripartite partners - namely the Shareholder, Clients and the Bank. I implore stakeholders in the agricultural sector to deploy their energy and zeal under the new normal to stimulate production and optimise output”, Nghikembua concluded.

Issued by:

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

Premier agricultural lender, Agribank, has announced a package of relief and stimulus measures, which come into effect on 1 June 2020. The package was developed after an extensive consultation process with key stakeholders in the agricultural sector, as well as the bank’s shareholder.

The package consists of the following measures:

(a) Instalment relief – to qualify, clients will have to apply for the relief and demonstrate that they have been affected by COVID-19. Clients will be treated on a case-by-case basis upon merit. The instalment holiday will be for a period of 12 months. This means that from 1 June 2020 to 31 May 2021, Agribank clients who will qualify for this relief measure will not be mandated to pay their annual instalment. The repayment holiday applies to capital and interest on that instalment. The instalment will be capitalized, and an additional year will be added to the client’s loan term. Clients receiving the relief, who wish to keep to their original loan term, are free to do so. Existing arrears will not be capitalized but the penalty interest applicable to such arrears will be reduced from 2% to 1.5% during the relief period (i.e. the 12 months) after which period the penalty interest will revert to the original 2%. If a client has qualified for relief, the instalment holiday will apply to all loans which a client might have with the bank. Normal loan payments will resume after the instalment holiday period. Full collateral cover of the loans is to be maintained. Application forms will be available at all Agribank branches as well as on-line on the bank’s website.

(b) Interest rate relief – interest rates for the different bank products will be adjusted as follows:
(i) Rates above 8.5% will be reduced by 0.5%
(ii) Rates between 8.1% and 8.49% will be reduced to 8%
(iii) Rates below 8% will remain as is
(iv) Penalty interest on arrears will be reduced from 2% to 1.5% during the relief period, where-after such penalty interest will revert to 2%

(c) Stimulus loans – the bank is in the process of finalising funding arrangements to provide loans to farmers and agri-businesses to the value of N$200 million to stimulate production and help farmers to diversify income streams for enhanced resilience to be able to withstand variable weather conditions and pandemics such as COVID-19. Clients are advised that the commencement date of such stimulus loans will be announced in due course. The usual prudent and risk-based credit assessment criteria will apply, as do normal terms and conditions of these loans. The stimulus loans carry a grace period in line with the production cycle of the intended use of the loan. The maximum grace period is 12 months from the date of loan disbursement. Normal loan recovery procedures will apply to defaulting clients after the grace period.

(d) ITC de-listing and restructuring – the following measures will also come into effect:
(d.1) For pre-legal clients – de-listing will be done on payment of 10% of the client’s arrears; whilst restructuring of any of the client’s loan accounts will be effected on payment of 20% of the arrears. This means that a client wishing both to be de-listed and restructure their loan, will be required to pay 20% of their arrears prior to de-listing and restructuring. Viability of the farming business after restructuring must be proven as part of the assessment process. On successful restructuring of a loan account, bank policy allows for an additional 2 years to be added to the loan term.
(d.2) For legal clients – de-listing will be done on payment of 10% of the client’s arrears. A client will pay 20% of their arrears for restructuring if such a client is up to date with their repayment arrangement; if not up to date with repayment arrangements, the client will be expected to pay 30% of their arrears before restructuring can be implemented. The viability of the client’s farming business must be proven and a business plan of how such a business will be turned-around is required. An extension of up to 2 additional years can be made to the term of a restructured loan.
(e) Legal action – the following provisions will apply:
(e.1) if default judgment has already been obtained against a client – the bank will pend further action if COVID-19 impact is proven or upon successful restructuring in line with the guidelines above (in (d)).
(e.2) if legal action has started but not yet completed – the bank will pend legal action subject to the client consenting in writing to judgment and proof of COVID-19 impact or applicable down-payment on the arrears for restructuring (see (d)).
(e.3) if legal action has not yet started – the bank will not institute action if the impact of COVID-19 is proven or upon applicable down-payment on the arrears for restructuring (see (d))
As a caring partner, Agribank would like to invite farmers to make use of the relief and stimulus measures put in place. We see this an opportunity for our clients to re-set their farming business operations and are pleased to be able to extend a helping hand to them in these challenging times.

Issued by:
Sakaria Nghikembua
CHIEF EXECUTIVE OFFICER
For enquiries, kindly contact the Marketing and Communication Division at:
Tel.: 061 2074332
Cell: 0817684165
Email: rmuranda@agribank.com.na

Agribank COVID-19 relief measures