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Agribank wants farmers to pay loans using salaries

23/05/2018
by Kelvin Chiringa
News

Agribank has proposed that farmers repay their loans using their salaries, chief executive officer (CEO), Sakaria Nghikembua revealed yesterday to the minister of Agriculture, Alpheus !Naruseb.

The bank has been at pains to recover N$500 million worth of arrears from farmers with the help of two debt collectors, United Africa and Redforce of which only N$180 million has been recouped.

It has also managed to secure some N$170 million sourced towards the end of last year from a local bank in a bid to grow its loan-book.

Said Nghikembua, “What we are trying to do is to say, how do we help the client upfront so that they are actually at much easier position to repay their loan?”

“What we are saying is, we know that the loan farmers in this country are not full-time farmers. So there are people who have a job, they work somewhere. They get a salary every month, but they also have a farm where they probably have a foreman or a farm manager and then workers.”

“The normal expectation is that from the agricultural production they will be able to pay the loan and that still stays.”

He suggested that those with jobs could enter into a debit order so that they could, on a monthly basis be able to pay a portion of their annual installment, “So that when that time comes for all to pay the installment what is left is much smaller.”

He said this is not necessarily intended for those already in arears but only when clients come for loan application.

 Meanwhile, the CEO said that below target and new arears have so far emerged at the bank from annual installments due but not fully paid.

“The focus on collections is key to protect the bank going into the future,” he said.

The bank is battling previously disadvantaged farmers who have been engaged in a demo protesting their being blacklisted after they failed to play catch-up with their loans due to, among other things, successive droughts.

Meanwhile, with government subsidies drying up, the bank finds itself in a precarious situation and has been driven towards diversifying its funding sources.

 “But it’s important that when we source funds at least we do get them at a rate that will enable us to lend. A rate that reflects a developmental nature,” he said.

Money disbursed for new loans in financial year 2016/17 was just over N$300 million while N$357 million was dished out in 2017/18.

Average growth in terms of interest income for the bank was about 6% in the last three years.