Agribank Launches No Collateral Loan Product

28 Apr 2017

Agribank has launched a revolutionary “No Collateral Loan Product” in Oshakati on Friday, 28 April 2017. The no collateral loan product is in line with the Bank’s strategic plan; and responds to the need to be inclusive of all farmers country-wide, especially those in communal areas who do not have access to conventional collateral. The product therefore reaches out to communal farmers in a tangible and measurable way.

The product is targeted at salaried communal farmers who genuinely do not have fixed property in a proclaimed urban environment. Speaking at the launch, Michael Iyambo, the Vice Chairperson of Agribank’s Board of Directors, explained that Agribank continues to provide financing for agricultural purposes against mortgage collateral and/or fixed term investments. However, this “excludes the communal farmer who might actually also have the ability to repay his or her loan, but lacks convention collateral.”

“As a Bank, we decided to address this gap whilst reasonably mitigating our lending risks. Instead of paying once-a-year, the client will repay the Bank monthly. This makes it easier for clients to pay as they are now paying smaller amounts more frequently rather than paying a bigger amount once a year”, Iyambo explained. He also noted that instead of paying via bank debit orders, Agribank will deduct via payroll to enhance the collections success rate. Credit life insurance has been added to the product to ensure that the Bank gets paid in the event a client passes on whilst still owing on the loan. This way, too, the client’s family have peace of mind as the Bank will not claim anything against the deceased client’s estate.

Iyambo further revealed that Agribank decided to support the funding of agro-processing industries in order to add value to basic agricultural produce, create employment and expand production in support of economic growth. Agro-processing, which is a form of secondary production, means at a basic level that meat can be processed into other products; beans can be processed and tinned; milk can be turned into butter and produced on a bigger scale; maize and mahangu grains can be milled and processed into flour, and so on. Iyambo further noted that “value-addition will help uplift the contribution of agriculture to our country’s gross domestic product, which has been dwindling over the past 10 years.” He therefore invited prospective clients with good business plans in agro-processing to submit such plans to Agribank for consideration.

At the same occasion, Agribank Chief Executive Officer, Sakaria Nghikembua, stated that it is strategically imperative for Agribank to be inclusive and reach out to communal farmers as this increases food production at the household level; contributes to household-level food security; sets the stage for graduation into commercial farming, and contributes to GDP and economic transformation, while also furthering the Bank’s mandate.

Nghikembua went on to explain that no-collateral loans would range between N$5,000 and N$500,000 and can be used to purchase seasonal inputs, livestock, agricultural machinery; as well as finance water and power infrastructure for farming, fencing materials, tractors and other farm vehicles, amongst other things.

The loan is repayable over a period of 12 to 54 months, with the key qualification requirement being that the borrower’s employer must sign a payroll deduction agreement with Agribank before their employees can qualify for consideration. Disbursements are made directly to the suppliers of goods and services. The Agribank CEO stated that the no-collateral loan product is a step towards the Bank’s strategic objectives of catalysing transformation of the agricultural sector in Namibia. Nghikembua concluded by reiterating that Agribank is committed and ready to play its role in the economy.

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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