Agribank’s Credit Controls Worrisome

AUDITOR General, Junias Kandjeke, is worried about the inadequacy of credit controls exercised at the Agricultural Bank or Agribank of Namibia.

Kandjeke said in his report on the accounts of the bank for the year ended 31 March 2013 that these deficiencies result in low recovery rates on its scheduled loan instalments due by customers.

“For the past two financial years the recovery-actual instalments received as a percentage of scheduled instalments-remained below 20% and this trend has continued for the period after the financial year-end,” the Auditor General said in the report released this week.

He said the bank’s arrear loan book has increased by 50% from N$224 million in 2012 to N$335 million in 2013. The bank generally has adequate security in place for most of the loans, he noted.

“The impact of poor debt collection on its liquidity remains a cause of concern,” the report said.

The report shows that salaries, wages and other benefits amounted to N$33 million during the year, an increase of 41%.

The bank paid a whopping N$21 million to the medical aid scheme for retired employees during the period.

Income for the bank was N$115 million compared to N$113 million the previous year. The surplus for the year was N$30 million compared to N$17 million the previous year.

Agribank obtained a loan from Bank Windhoek of N$44 million at a rate of 9, 75% covered by a mortgage bond of N$66 million for the renovation of its head office. The loan is payable over 15 years.

In terms of long-term borrowing, the government settled the bank’s outstanding line of credit balances with the African Development Bank in 2009. The amount settled was N$218 million.

During 2012, the Ministry of Finance transferred N$201 million to the bank N$61 million was for financing aquaculture and crop production and training Affirmative Action loan beneficiaries. The remaining N$140 million was for financing of both commercial and communal farming projects. In 2013, the government transferred a further N$120 million.

During the year, 92 loans were provided for drought relief at a cost of N$20 million. N$2,9 million was provided to the Etunda Small Farmers.

Source : The Namibian