Agribank Steps Into The Future

10 Feb 2017

Following the adoption of its new 5-year Strategic Plan (2016/17 – 2020/21), the Agricultural Bank of Namibia (“Agribank”) is steaming full-speed ahead as it transform itself into a model world-class organisation.

Aligned to the Harambee Prosperity Plan, the Bank’s strategic plan has five focus areas namely, the Customer, Financial Sustainability, Employees, Governance as well as Socio-Economic Transformation which are supportive of its vision and strategy. Service Excellence, Innovation and Excellence in Execution will be the building blocks in executing the new strategy. The plan also outlines various key initiatives under each of the focus areas.

At a media briefing in Windhoek, Agribank’s Chief Executive Officer, Sakaria Nghikembua, highlighted some of the features of the strategy.

Key initiatives under the Customer focus area include understanding market insights through on-going research activities, offering relevant products and ensuring the Bank’s accessibility through increased footprint and digital platforms. Other innovative initiatives include the development of products for communal farmers in order to broaden financial inclusion and ensure food security at a household level. Nghikembua explained that loan book growth, interest income growth, cost containment, arrears management as well as non-interest income growth, will be amongst the core initiatives which are being implemented to ensure the Bank’s financial sustainability and thus enhance its ability to fulfil its developmental mandate in the long term.

It is against this background that the Bank is pursuing an intensified arrears collection strategy. The Bank has total arrears of just over N$500 million of the total loan book of N$2.4 billion, which represents an arrears-to-total advances ratio of 21%, whilst the benchmark ratio for development financing institutions is 15%. The sustained high levels of arrears would threaten Agribank’s financial sustainability and its ability to deliver on its mandate in the long-term. As part of the arrears collection strategy, the Bank has appointed debt collectors to assist it in collecting outstanding repayments from clients with effect from this month.

The new 5-year strategy further provides for the attraction and recruitment of staff with the required competencies, attitude and potential, while concerted efforts will be deployed to improve leadership and managerial capacity of employees through appropriate training and development interventions. The introduction of the recognition and reward scheme, performance-based incentives, performance management as well as creating a high performance culture are some of the initiatives under the Employee focus area. A performance management system has already been implemented with all employees of the Bank signing performance contracts for the second half of financial year ending 31 March 2017. New performance contracts are being developed for the new financial year starting in April 2017.

Due to the nature of its operations, the Bank is placing a lot of emphasis on risk management and compliance as part of its Governance focus area. Towards this end, Compliance and Risk specialists have already been recruited whilst the recruitment of a Governance Executive is underway. Upcoming initiatives include the company-wide roll-out of risk and compliance awareness sessions, the implementation of a compliance testing plan that has recently been developed, training of the Board and Senior Management on Governance-related matters and the roll-out of a risk management framework within the Bank. plans to embed risk management, enhance compliance and risk awareness under its Governance focus area. Ensuring business continuity management and enhancing audit and forensic capacity will also receive priority under the Governance focus area.

The Bank also plans to enhance its brand in the market, while extending lending to emerging farmers in communal areas, funding agro-industries and decentralising lending to the regions. Training and mentoring of emerging farmers to improve their production output, through an in-house division, as well as improving stakeholder engagement and granting bursaries in agriculture related fields, are some of the initiatives to support the socio-economic transformation focus area of the new strategic plan.

Nghikembua then highlighted some of the milestones achieved over the past six months as follows:

•Finalisation and implementation of the 5-year strategic plan
•Finalisation of intensified arrears collection strategy
•Implementation of a Bank-wide performance management system
•Inculcating a stakeholder engagement and communication culture within the Bank
•Revision of key policies such as the Delegation of Authority as well as aligning the Valuations policy to market practices. These policies have the effect of enhancing decision-making and positioning the Bank for competition in the market-place
•Taking and implementing a decision to establish a training and mentoring division for farmers within the Bank with effect from 1 April 2017
•Finalising the budget for the 2017/2018 financial year well ahead of time
•Finalising the annual financial statements and the annual report for financial year 2015/16 and holding the annual general meeting within six months of financial year-end as required by law.

This was a singular achievement in many years, which will now become the standard and embedding a culture of conducting robust reviews of the bank’s holistic performance across levels and metrics.

Nghikembua further stated that, despite the challenging operating environment, the Bank has maintained credible financial performance in the year so far. He expects the Bank to meet or exceed its key financial targets for the full year to the end of March 2017.

The Agribank chief explained that the Bank’s operating environment continue to be characterised by increased regulation and intensified competition, while the volatile weather cycles also pose their own challenges. According to him, this calls for considered strategic focus to achieve growth, maintain relevance and ensure sustainability. He said income-growth and cost-containment strategies are necessary in achieving the strategic objectives of the Bank.

Introducing a high-performance culture, embedding customer centricity, attaining financial inclusion, improving service efficiencies as well as leveraging technology and constant innovation, are some of the prerequisites to make Agribank a winning institution.

Nghikembua concluded by listing some of the key focus areas for the rest of this financial year as:

•Ensuring disciplined execution across the business
•Ensuring readiness to implement the training and mentorship division by 1 April 2017
•Delivering financial performance in respect of revenue, expenses, profit and collections
•Rolling out the no-collateral product for communal farmers by 31 March 2017
•Delivering on business process re-engineering by 31 March 2017 to improve service efficiencies
•Finalising performance contracts for the 2017/2018 financial year
•Ensuring readiness for the annual audit, delivering a no qualified audit and hosting the Annual General Meeting in September this year and,
•Sharing what Agribank does with the public to ensure we reach out to all potential customers in both communal and commercial areas

MEDIA RELEASE: Agribank steps into the future as new strategy swings into action

Issued by:
Sakaria Nghikembua
Chief Executive Officer

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