• January 20th, 2019
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FNB offers loans to combat bush encroachment

Archived, Business & Finance
Archived, Business & Finance

WINDHOEK – First National Bank (FNB) Namibia is offering loans to farmers to combat bush encroachment. The loans are structured for 10 years and farmers have the option of either a pay loan, with capital interest over the ten year period or to only pay interest for three years and capital and interest from the fourth year over the remaining loan period. “If one assumes that it takes about three years for the veld that was cleared to be fully utilized again, then it makes sense to offer something in line with this occurrence,” said the bank in a statement. The bank assumes that a loan of N$1 million would result in annual savings of about N$65 039 if a farmer only pays interest annually and no capital. The difference in repaying the loan, interest and capital over 10 years compared to paying it over the remaining seven years is N$42 821. For a N$3 million loan the annual saving is estimated at N$195 117. Christo Viljoen, the head of FNB agricultural financing division, says it is evident that bush encroachment poses a serious threat to farming in Namibia. Not only is there an estimated loss in meat production of about N$1.4 billion per annum, but there are other consequences as well. Invader bush leads to water loss and creates artificial droughts. Moreover, a decrease in farm profitability causes a decline in employment. On the positive side, research has shown that where a concerted effort was made to do bush clearing, the increase in carrying capacity amounted to between 50 and 60 percent. This resulted in higher profitability and a decrease in rainfall dependency. Each farmer’s application must be accompanied by a technical report. This report will address the map of the farm that will indicate the specific size and location of the targeted area to be treated, the long-term rainfall, as well as rainfall during past rainy seasons and the estimated number and size of targeted species on the land specified. There should also be a cost and benefit analysis, which will include the method of bush clearing with estimated cost per hectare and total cost of programme; the estimated expected benefits through increase of production during the next 3 to 5 years, as well as an indication of how these benefits will be used and resources needed to optimize increase in carrying capacity. In addition the technical report should have an after care programme, which will be implemented to keep the savannah in the post-treatment condition, and a certificate needs to be provided that confirms that the chemicals used are environmentally friendly. Applications should also be accompanied by updated financial information, income statements and balance sheets, as well as cash flow projections. “Our vision at the FNB Agri Division is to continuously stay at the forefront of knowledge, product development and service delivery. We invest in agriculture on all levels to add value and share our knowledge and expertise. In line with this vision, FNB Agri embarked on a research and investigation project. The goal and objective was to establish in what way we can get involved in partially solving the huge problem of bush encroachment. We wanted to offer an alternative financing option that would enable farmers to make it more feasible to do bush encroachment and over time increase their carrying capacity and eventually their profitability,” said Viljoen.   By Staff Reporter
New Era Reporter
2013-10-21 12:11:11 5 years ago

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