Agribank to Go After Loan Defaulters Despite Drought

AGRIBANK will go after loan defaulters despite the fact that a lot of farmers are still recovering from last year’s drought, which has been described as one of the worst in the country’s history.

The farmers only made use N$10 million of N$91 million the bank had made available for drought relief.

The bank says in an update of its performance from January to March this year, that drought relief measures ended on 31 March and said farmers, especially those in arrears, never took full aantage of drought relief measures that were offered by the bank including the ring fencing of arrears, holiday payments, production loans and water infrastructure development.

“In this case, the bank has no alternative but to start implementing its Arrear Recovery Strategy against clients who are in arrears to recover outstanding amounts,” the bank said.

Agribank said the drought significantly affected the agricultural sector and continues to have negative effects on livestock and dryland crop production.

Agribank introduced the drought relief measures with the provision of N$91 million to assist farmers avert the effects of the drought.

“To date N$10,5 million has been approved for mostly water infrastructure and production loans with bearing interest rate of two percent for communal and four percent for commercial farmers respectively. The low response to the scheme is a result of the clients being cautious of falling knee deep in debts and the bank’s collateral requirements,” the bank said.

The drought saw farmers sell their livestock from August to December 2013, resulting in low inventory levels experienced in January to March. This saw Agribank’s performance during the period increased by 37% to N$84,4 million over the same period in 2013.

This increase was mostly attributed to an increase in the demand for production loans, farm vehicle loans, implement loans and improvements loans.

“The livestock loans, which are traditionally always in high demand decreased by 16% when compared to the same period last year,” the bank said.

Agribank with low inventory of livestock and the sporadic rainfall, expects recovery of the agriculture industry to be painstakingly slow, further exacerbated by the high input costs and the weak recovery witnessed in European markets.

Commercial market segment accounted for 65% of the loans granted, small scale farmers in communal areas accounted for 20%, the affirmative action loans were 11% and the post settlement farmers four percent.

The farmland loan product increased by 87% to N$31 million from N$16,6 million during the same period last year. Of the five farms bought, only one was acquired for affirmative action for N$9,9 million.

Source : The Namibian