THE arrears on agricultural loans extended by Agribank marginally increased from 19% at the end of 2019 to 20% in 2020.
By the end of its financial year in 2019, Agibank had a total loan book of N$2,8 billion, with people owing N$532 million behind with their payments.
This was confirmed by Agribank’s chief executive officer Sakaria Nghikembua last week, in an update to The Namibian on rolling out the bank’s relief programme.
Nghikembua said loans in arrears increased to 20%, and more details will be released with their 2019/20 financials.
“The bank’s arrears ratio, so far, generally rotates around the 20% mark,” he said.
The arrears ratio indicates the value of the bank’s loan book that is behind with their annual payment – generally the ratio is bench-marked at 15% but the bank has exceeded it by 5%.
Agribank loans are repaid on an annual basis in contrast to the monthly payment of principal debt and interest, at commercial banks.
The loans are repaid annually given the nature of farming as opposed to other income-generating business activities.
According to Nghikembua “this means it has not worsened over time despite the operating environment because of various management actions which have been implemented”.
He said the operating environment continues being a challenge but the bank remains focused on implementing actions that mitigate the rate of default as much as possible, including implementing the Covi-19 relief package.
To give repayment relief to farmers and extend more loans, the bank was tasked (by the government) to go to the market and borrow around N$200 million to enable them to lend to farmers and stimulate production in the agricultural sector.
“We are already in the market and quite advanced in sourcing funds at appropriate interest rates,” said Nghikembua.
He added that they will inform the bank’s clients and the public when they have secured the funds.
With the relief package, Nghikembua said they had commenced information road-shows on the Covid-19 relief and stimulus packages and have registered very good progress so far.
Despite the loans in arrears being at the 20% mark, he said the institution has consistently sent out a message about prudent management and long-term financial sustainability as the only way it can fulfill its long-term mandate.
Nghikembua said all the bank’s major business performance metrics are growing in the right direction – all the time.
“This is a key achievement of the board, management and employees of the bank,” he stated.
According to Nghikembua, Agribank is one of the few public enterprises that have shown consistency in delivery in the past number of years.
“Whether you talk about the growth of the loan book, the increase in collections and recoveries, the growth in interest income, the prudent management of provisions for bad debt on loan advances through appropriate mitigating actions, the exemplary management of operating expenses, the positive surplus positions year after year or the independently rated improvements in the bank’s governance metrics,” he explained.
The banker also pointed out that Agribank is one of the few public enterprises that complete external audits and hold annual general meetings timeously.
“Every year of the past four years, we have completed our audit and held our annual general meetings with the shareholder within six months of financial year-end,” he said.
email: erastus@namibian.com.na
