Ostrich loan hatches N$28 million failure

A HIGH Court judgement has put the seal of failure on a multi-million-dollar loan that was meant to get communal ostrich farming in southern Namibia off the ground.

Just like ostriches cannot fly, the loan that the Agricultural Bank of Namibia extended to the Karas Communal Ostrich Farmers Trust a little over six years ago failed to help the trust take to the sky and soar to great heights of success, it is evident from a default judgement granted by the Registrar of the High Court on Friday. Now, it appears, the trust that was supposed to be a self-help initiative to empower communal ostrich farmers had survival strategies that were about as successful as those of the dodo.And, like the dodo, or perhaps an ostrich after an epidemic of bird flu, the trust is itself now also dead.Kaput, finished and klaar.None of the trustees of the Karas Communal Ostrich Farmers Trust who were sued by the bank gave any indication that they would oppose the legal step, leading to a judgement in the amount of over N$28,63 million being granted against the trustees by default.The trustees include former Karas Regional Governor Stephanus Goliath, the current Governor of the Karas Region, Dawid Boois, and a former Karasburg Regional Councillor, Lazarus Kairabeb.The other trustees who were cited, in their nominal capacity as trustees, are Joel Stephanus, Daniel Apollus, Hendrik Frederick and Johannes Isaak.Although the trustees were cited by the bank, it appears that the Namibian Government will have to carry the can for the trust’s inability to repay the money, since Government had guaranteed the loan.The trust and the bank first entered into a loan agreement in 1997, but adjusted the terms of their agreement in a document signed on March 8 1999.According to that agreement, the bank extended a loan of N$14,5 million to the trust for a 15-year period.The first two years of the 15-year period were to be interest-free, while the trust also did not have to repay any of the loan capital in that time.The loan was tied to a condition that the money was to be used only for buying a 28,04 per cent stake in Ostrich Production Namibia, the ostrich slaughterhouse at Keetmanshoop whose name has since been changed to Karas Abattoir and Tannery.That enterprise, at least, is still up and running – but it, too, has received a substantial infusion of public money.Other conditions in the loan agreement were that the trust had to get a written guarantee from Government that it would cover the loan capital plus interest, as well as a written undertaking from Government that it would subsidise the interest payments on the loan for the first five years.In addition, the OPN shares that were to be issued to the trust had to be pledged to the bank as collateral for the loan.That means that the bank now sits with the 28,04 per cent shareholding in Karas Abattoir and Tannery, while Government will be required to repay the trust’s loan to the bank – of which it is in any event also the 100 per cent shareholder.The former Chief Executive Officer of the trust, Salmaan Jacobs, said yesterday that there had also been a second loan of N$14 million from the bank.This was mostly used to buy fodder for the ostriches that the trust’s members were raising in order to deliver the birds to Karas Abattoir and Tannery, he said.That second loan amount was also used to pay for the transport of the fodder, Jacobs added.A shortage of fodder led to some 2 500 of the communal farmers’ ostriches dying in the 2001-02 breeding season, causing a collapse in the communal ostrich-farming industry at the time.Jacobs said the trust’s operations had been taken over by the Ministry of Agriculture in mid-2003 already, as the Ministry was of the opinion that it was better equipped to assist communal ostrich farmers in setting up viable farming activities.Jacobs said the trust had been established solely to bring empowerment to previously disadvantaged farmers, and was an initiative that was hatched in southern Namibia as a self-help empowerment effort.While it had its difficulties, it was also bound to be lucrative and was showing progress, and its demise was only to the benefit of the commercial ostrich-farming sector, Jacobs argued.In terms of the High Court’s default judgement, Agribank has to be repaid a total of N$28 636 345,46, together with annual interest of 14,5 per cent with effect from December 16 last year.The interest alone adds over N$300 000 a month to the trust’s debts with the bank.Now, it appears, the trust that was supposed to be a self-help initiative to empower communal ostrich farmers had survival strategies that were about as successful as those of the dodo.And, like the dodo, or perhaps an ostrich after an epidemic of bird flu, the trust is itself now also dead.Kaput, finished and klaar.None of the trustees of the Karas Communal Ostrich Farmers Trust who were sued by the bank gave any indication that they would oppose the legal step, leading to a judgement in the amount of over N$28,63 million being granted against the trustees by default.The trustees include former Karas Regional Governor Stephanus Goliath, the current Governor of the Karas Region, Dawid Boois, and a former Karasburg Regional Councillor, Lazarus Kairabeb.The other trustees who were cited, in their nominal capacity as trustees, are Joel Stephanus, Daniel Apollus, Hendrik Frederick and Johannes Isaak.Although the trustees were cited by the bank, it appears that the Namibian Government will have to carry the can for the trust’s inability to repay the money, since Government had guaranteed the loan.The trust and the bank first entered into a loan agreement in 1997, but adjusted the terms of their agreement in a document signed on March 8 1999.According to that agreement, the bank extended a loan of N$14,5 million to the trust for a 15-year period.The first two years of the 15-year period were to be interest-free, while the trust also did not have to repay any of the loan capital in that time.The loan was tied to a condition that the money was to be used only for buying a 28,04 per cent stake in Ostrich Production Namibia, the ostrich slaughterhouse at Keetmanshoop whose name has since been changed to Karas Abattoir and Tannery.That enterprise, at least, is still up and running – but it, too, has received a substantial infusion of public money.Other conditions in the loan agreement were that the trust had to get a written guarantee from Government that it would cover the loan capital plus interest, as well as a written undertaking from Government that it would subsidise the interest payments on the loan for the first five years.In addition, the OPN shares that were to be issued to the trust had to be pledged to the bank as collateral for the loan.That means that the bank now sits with the 28,04 per cent shareholding in Karas Abattoir and Tannery, while Government will be required to repay the trust’s loan to the bank – of which it is in any event also the 100 per cent shareholder.The former Chief Executive Officer of the trust, Salmaan Jacobs, said yesterday that there had also been a second loan of N$14 million from the bank.This was mostly used to buy fodder for the ostriches that the trust’s members were raising in order to deliver the birds to Karas Abattoir and Tannery, he said.That second loan amount was also used to pay for the transport of the fodder, Jacobs added.A shortage of fodder led to some 2 500 of the communal farmers’ ostriches dying in the 2001-02 breeding season, causing a collapse in the communal ostrich-farming industry at the time.Jacobs said the trust’s operations had been taken over by the Ministry of Agriculture in mid-2003 already, as the Ministry was of the opinion that it was better equipped to assist communal ostrich farmers in setting up viable farming activities.Jacobs said the trust had been established solely to bring empowerment to previously disadvantaged farmers, and was an initiative that was hatched in southern Namibia as a self-help empowerment effort.While it had its difficulties, it was also bound to be lucrative and was showing progress, and its demise was only to the benefit of the commercial ostrich-farming sector, Jacobs argued.In terms of the High Court’s default judgement, Agribank has to be repaid a total of N$28 636 345,46, together with annual interest of 14,5 per cent with effect from December 16 last year.The interest alone adds over N$300 000 a month to the trust’s debts with the bank.

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