Drought not rattling loan repayments

03 Jun 2013 05:57




The banking fraternity expected the extreme drought to lead to drops in the rate of agricultural clientele bank loan repayments.
Even though the extreme drought has caused financial problems for many farmers, this problem has not led to a reduction in the rate of agricultural clientele’s bank loan repayments, according to most banks contacted.
Riaan van Rooyen, Bank Windhoek’s Head of Corporate Communication and Social Investment said: “Because of the financial hardships experienced by farmers, the bank assists existing clients through difficult times based on individual requirements, by considering extension of payments, restructuring of facilities or offering additional working capital.”
He said the farmers have managed their payments as the bank has terms of choice to make payments on a quarterly, semi-annual and annual payment basis.
Up to now there has not been any substantial increase in defaults compared to past years. What has been a helping factor in ensuring that farmers uphold their payment agreement is because most farmers have crop insurance and other mechanisms to counter poor harvests and yields to be experienced during times of drought.
Van Rooyen urges the bank’s clients ‘to contact their branch managers and share potential problems upfront in order to find a mutual solution’ and not to wait till problem strikes to react.
Because of the financial hardships experienced by farmers, the bank assists existing clients through difficult times based on individual requirements, by considering extension of payments, restructuring of facilities or offering additional working capital.
“The agricultural sector has always been a focus point for Bank Windhoek, hence support to the agricultural sector is given through various sponsorships, Social Investment Fund support and empowerment of farmers through sharing of knowledge,” said Van Rooyen.
To curb fraudulent means by using the drought as an excuse not to make payments, branch managers visit clients to build relationships and get insight into their needs and circumstances.
Christo Viljoen the Head of FNB’s Agri Division says the the bank has not experience noticeable decrease in the loan repayment that can be associated to the drought.
“We have however seen an increase in the request for temporary overdrafts.”
He advices farmers to be proactive by informing the bank of any problems in time before the situation gets worse and you cannot honor your commitments towards the bank.
Farmers must make sure to approach a bank with solutions that the bank will use in considering their requests in time.
Viljoen said, “Be informed. Be in touch with your industry experts or farmers association to know what is happening in the industry. Read, plan and talk to fellow farmers and your bank.”
The bank is involved in a number of Corporate Social Investment (CSI) initiatives such as assisting the Brahman breeders in sourcing the best genetics for farmers, working in association with different breeders associations, Windhoek Show Society agricultural sponsorship and responds to farmers associations sponsorship request.
Regan Mwazi, Manager of Marketing Communication of Agribank said, “It is too early to know the impact of the drought on the performance of the bank as clients are still to approach the bank on financial assistance or make other arrangements as a result of the drought.”
Being accommodating towards the crisis suffered with financial effects, the bank has mobilized resources in response to the agriculture industry problem.
Mwazi said Agribank has an on-going consultation with relevant stakeholders on drought mitigation and preparedness, of which an announcement will be made soon.
Agribank joins the Government in calling upon all farmers to sell off their livestock while still in good shape.
The prolonged dry spell has affected the country’s economy and will lead to an increase of imports especially maize. He said the total cereal production broadcasted for 2013 was 96 tonnes but it dropped to - 42%, as an effect of the drought and an outbreak of army worms in some crop producing parts in the north.