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