Agribank avails N$130m to farmers

September 8, 2015, 4:25am

Agribank avails N$130m to farmers

The Agricultural Bank of Namibia (Agribank) has to date availed N$132.4 million worth of loans to commercial and communal farmers. 

Agribank Chief Executive Officer, Leonard Iipumbu, said the loans given to the 24 clients falling under the Affirmative Action Loan Scheme (AALS) is roughly 6.3%. However, the clients falling under the National Agricultural Credit Scheme (NACP) gulped about N$42.6m, which was the highest amount from the funds loaned. 

In addition, the NACP has a total of 1058 clients who are receiving funds from Agribank. “Meanwhile, 32.2% of the total production loans have gone to small-scale farmers under the National Agricultural Credit Scheme (NACP). 

The NACP is set to support small-scale farmers, currently under the Production Loan Scheme,” he stated. Iipumbu told The Villager that Commercial Production Loans which were provided under the Green Scheme initiative totalled N$52.5m, taking up the biggest chunk of that loan facility by 40%. 

“Despite the Commercial Production Loans being largely for those who farm on large farms, they also include clients who fall under the AALS as they might also have large farms, or they use their farms for commercial purposes,” he explained. 

To date, the Ostrich Production Loan book had a total value of N$14m, which is 11% of the total money spent on all the production loans. “We ensure that all loans are paid for as we make sure there is collateral, and so far we have not encountered anyone who did not want to pay their loans. 

However, if we encounter anyone who is not willing to pay, we would of course take legal action. We demand the recovery of these loans,” Iipumbu stressed. 

Production loan facilities are used for the acquisition of seeds, fertilizers, herbicides and pesticides, weeding, fuel and oil, transportation costs, wages for temporary workers, the leasing of grazing, licks, veterinary medicine, horticulture and micro-irrigation. 

The facility is available to both full and part-time farmers, and the applicable interest rate is 4% for communal farmers, and 8.50% for commercial farmers. 

Production loans are provided by Agribank, and it was incepted in 1990. To date, a total of N$132.4m in loans as mentioned above have been given out. 

In addition, an amount of N$91 million was set aside for products like the Production loan facility, Water and Infrastructure facility, Ring-fencing of Arrears and the Suspension of penalty interest and Instalment holidays for the one-year facility. 

In terms of the Affirmative Action Loan Scheme (AALS), Agribank has given N$8.2m in production loans to PDNs. The production loan facility is granted against security of fixed property (mortgage bond), or any other acceptable form of security. The bank will grant the loan for 80% of the valuation of the security. 

Meanwhile, the current net worth of Agribank stands at N$1.8 billion in a period of 10 years from N$672 million in 2004. The bank’s growth and loan book performance averaged 8.5% in the period under review. The bank collectively, on all types of loans, availed N$1.25b to 987 previously disadvantaged Namibians, constituting 52% of their loan book. 

Roughly 3382 permanent and 6764 temporary jobs have been created or retained through the purchase of farmland under the initiative, indirectly supporting more than 13 000 families. 

A fortnight ago, the bank also revealed that it has thus far spent N$75 million on loans extended to small-scale farmers under the NACP in 2014, compared to N$29 million spent in 2013. 

Iipumbu was then quoted as saying that the 159% increase of loans from 2013 to 2014 is an indication that there is demand from communal farmers, despite the restrictive nature of the lack of collateral. 

“The loans extended under the National Land Reform Program for the acquisition of commercial farmland by previously disadvantaged Namibians have also seen growth of 125 per cent to N$157.7 million, which allowed for the purchase 141,430.39 hectares,” he said. 

In addition, AgriBank has financially assisted previously disadvantaged Namibians to acquire a total of 5.8 million hectares, contributing towards the targeted 15 million hectares by 2020. 

Currently, the agricultural sector has unfortunately been facing big challenges, including a severe drought in 30 years, disease outbreaks as well as export restrictions by neighbouring South Africa, which is the main trading partner of Namibia. 

In 2013, the European Union injected 2.9 million Euros (roughly N$37.7 million) into the Communal Land Development Project (CLDP) to offer advisory services to communal farmers in the Omusati, Ohangwena, Kavango East and West, Zambezi, Otjozondjupa and Omaheke regions. 

This is while AgriBank has invested N$24.5 million under the Farmers’ Support initiative for the past 10 years, which includes the transfer of skills and knowledge to enhance farm productivity. 

The Namibian economy is projected to grow at an average rate of 5.6% in the next three years. The projections set for the 2015, 2016 and 2017 financial years stand at 5.4%, 6% and 5.8%, respectively. 

The National Planning Commission (NPC) Public Relations Officer, Fillemon Nangonya, said the expected growth will mainly be driven by the supply-side via expansion in most economic production sectors, saying the manufacturing, mining as well as public sector are expected to be the main drivers of this growth. 

At present, the construction sector is the fastest-growing sector averaging growth of 15.3%. However, its contribution to GDP growth is very minimal, averaging only 3.5% over the same period. 

“Though its contribution to total GDP is very low compared to other sectors, the construction sector is among the top five sectors in terms of job-creation, as it accounts for over 7% of the total employed after the agriculture, trade and private household sectors."

by Charmaine Ngatjiheue