The Deputy Minister of Public Enterprises Engel Nawatiseb’s insistence on the introduction of collateral-free loans for Namibian farmers, particularly in the communal farming sector, was met with consideration by Agribank during a strategic stakeholders’ meeting held last week.
Speaking at an introductory function Nawatiseb called on Agribank to develop innovative and proactive strategies to ease the burden of collateral and by so doing assist farmers in rural communities to recover from the negative effects of the recuring drought.
“It is gratifying to note Agribank has its footprint in all corners of our beloved Namibia and therefore I recommend that Agribank’s business model be geared more towards viability and sustainability and less emphasis be placed on collateral requirements, which are a major stumbling block for communal farmers,” said Nawatiseb.
Nawatiseb further emphasised that greater emphasis should be put on the use of innovative finance instruments to reduce the risk of financial institutions in lending to agriculture since this would help drive the uptake of agricultural products and drive sustainable growth of the agricultural sector.
He stressed such intervention would make an important contribution to government efforts for accelerated and sustainable economic growth and development, which is one of the most critical factors in poverty reduction and employment creation
Agribank CEO Leonard Iipumpu responded that the bank would soon roll out the proposed collateral-free business model to farmers.
This will also be aided by an “after care” support facility to prepare farmers to brave the looming drought conditions.
“During times of disaster, Agribank complements the government in providing assistance to mitigate the effects of such disaster on vulnerable communities and towards the agriculture industry,” he said.
Iipumpu noted that in 2013 Namibia experienced the worst drought in 30 years, which affected agriculture the most in terms livestock and crop production. The sector was severely affected as a result of shrinking livestock inventories and the significant reduction in the area planted due to lack of rain.
He indicated an amount of N$91 million was set aside for products, namely, production loan facility, water and infrastructure facility, ring fencing of arrears, suspension of penalty interest and installment holiday period for a one year facility, at reduced interest rates of 2 percent and 4 percent for communal and commercial farmers respectively.
“As we build greater harvests and raise incomes of farmers, Namibia’s rural economies will boom and thousands of people will be lifted out of poverty into wealth,” stated the Agribank CEO.
He commended the newly established Ministry of Public Enterprises for its flexible approach towards proposing mitigating solutions for the farming sector and for being a strategic stakeholder in agriculture.