FARMLAND AUCTIONS, THE BANK’S LAST RESORT, NOT THE FIRST

12 Aug 2025

In the recent past, Agribank has observed claims alleging that the Bank is targeting farms owned by previously disadvantaged Namibians for auctions and is undermining objectives of the National Land Reform Programme. These claims are misleading and do not reflect the Bank’s intentions to provide financial solutions and services towards supporting the agriculture sector.
Our Mandate if to empower, not to auction farms
Agribank is a development finance institution, established by an Act of Parliament, the Agribank Act, 2003 (No. 5 of 2003). This Act mandates Agribank to advance loans to persons engaged in agriculture and activities related to agriculture. In accordance with the provisions of the Act, the Bank is empowered to secure repayment of funds advancedby Agribank through registration of collateral. Where loan defaults occur, and all reasonable collection efforts have been exhausted, the Bank is empowered to repossess secured assets. Such repossessions typically occur through public auctions. However, this is newer the Bank’s preferred course of loan recovery action.
It is imperative that our stakeholders understand that the Bank’s operating model is based on advancing loans and recovering such loans when they fall due. Therefore, the sustainability of the Bank depends on commitment to loan repayment by the clients. Failure of clients to meet loan repayment obligations means the Bank will not be able to extend loans to more customers in future, especially the youth and emerging farmers seeking to develop and grow their agriculture enterprises.
Capital injections, whether through government transfer or debt from financiers, are only part of the banking equation. Lenders and shareholders of Agribank expect these funds to be repaid back and recycled to support future generation of farmers. When defaults increase and recovery prospects diminish, the Bank’s creditworthiness is affected, making it more difficult to raise additional funding required to transform the agriculture sector. In today’s fiscal environment, Agribank must strive to remain self-sustaining.
Support to clients
At the Bank, we understand that that majority of our clients operate in a challenging environment mainly characterised by harsh climatic conditions and changing economic conditions. As such, the Bank remain flexible in aligning repayment terms to cashflow cycles, offering loan restructuring and relief programme to clients. Similarly, the Bank encourages clients, especially those with multiple income streams to make regular repayments towards reducing their loan instalment rather than waiting for the loan to fall due and payable. In certain cases, this is now implemented as a condition of loan approval, fostering responsible financial behaviour. The Bank also offers voluntary advisory services and training to help clients strengthen their farm management and financial planning skills. These services are offered at no cost, as part of the Bank’s commitments towards improving productivity and income growth of farming enterprises.
Dialogue before hard collection actions
In cases of default or imminent default, Agribank initiates recovery efforts through dialogue. The process begins with direct engagement to understand the challenges and explore viable solutions. Some of the available options include repayment arrangements, loan restructuring or grace periods where possible. We would like to put it on record that farm auctioning by Agribank is not our objective, but the last resort. Farm auctions are pursued in cases when:
Client fails to engage and respond to bank’s communication
Repayment arrangements are made and not honoured
No payment arrangements made at all
No payments havebeen made to the loan since disbursement
Calling on clients to engage
Agribank wishes to reiterate that non commitment to loan repayment obligations undermines the Bank’s development mandate and puts future generations at risk of not having access to affordable agriculture finance. The financial sustainability of the bank depends on clients honouring their repayment obligations.
The Bank is therefore open and ready to engage with all clients and strongly call on clients to initiate dialogue long before matters escalate to legal enforcement. Early engagement allows the Bank and clients to explore practical solutions either through restructuring, revised payment plans, access to advisory support and other feasible options. Proactive engagement and early actions can prevent debt from accumulating beyond control, making it easier to reset or turnaround the farming operation.
In conclusion, at the Bank we believe in co-creating solutions and are committed to working with clients to turn the farms into productive assets. This is not on with the view to protecting individual farmers but preserving the sustainability of the bank for future generation. The sustainability of the bank is therefore a shared responsibility.
END.
Issued by:
Dr Raphael Karuaihe
Chief Executive Officer

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