The Agricultural Bank of Namibia (Agribank) has set a N$90m budget for drought relief measures.
Today, the bank announced four relief measures to assist the farming community in mitigating the current impact of Namibia’s worst drought in 30 years.
A new Production Loan Facility to allow communal, resettled and commercial farmers to cover daily costs on production inputs such as seeds, fertiliser, herbicides, pesticides, fuel and oil costs, as well as wages has been introduced.
“N$75m has been allocated for this facility, which will be offered at a reduced interest rate of four percent for commercial farmers and two percent for communal and resettled farmers,” said Agribank CEO, Leonard Iipumbu today.
The first year will be capitalised while the remaining balance will be amortised for five years. However, farmers in arrears as of 31 December 2012 will have to pay 25% of their arrears upfront, to qualify for this facility. Agribank thus urges this category of clients to take full advantage of this facility to manage their existing arrears.
Another relief measure being initiated by Agribank is the N$15m ‘Water and Infrastructure Facility’, to enable farmers to upgrade water and other infrastructure to sustain their farms, which have been severely affected by the current drought.
Commercial farmers will be assisted at a four-percent interest rate, while communal and resettled farmers will have a two-percent interest rate for a loan term of 15 years.
The Ring Fencing of Arrears and Suspension of Penalty Interest Facility is for farmers in arrears as of 31st December 2012, who will be given an amnesty period of five years.
“Farmers will have to pay 25% of their total arrears upfront and the balance shall be ring-fenced for five years to be paid in five equal instalments. To ensure client affordability, the penalty interest on arrears will be suspended. Defaulting on this facility will leave the bank with no other option but to take legal action and clients currently already at the legal department (of the bank) will not qualify for this facility,” Iipumbu added.
According to the bank, this facility will save farmers from forced closure by giving them a second chance, as Iipumbu argues this is more of a “workout and restructuring of the arrears”.
The One-Year Instalment Holiday Period Facility is the fourth measure meant to defer until the end of the loan period, thus extending it by one year.
Explained Iipumbu, “A loan period of ten years for livestock would be extended to 11 years at applicable interest rates. Clients not in arrears by 1 January 2013 will qualify for this facility.”
The new facilities idea came up after Agribank reviewed and adjusted its recovery strategies in response to the worsening drought situation, which it has admitted has had an impact on the decreased instalment payments, resulting in the increase of defaulting rate.
This is good news to farmers who are continually faced with problems such as low prices per head, high input costs, increased mortality rate on stock and crop failure, thereby greatly affecting their loan repayment.
The closing date to apply for these drought relief facilities is 31 March, 2014.