Minister of Finance, Iipumbu Shiimi last week urged the Agricultural Bank of Namibia at its annual general meeting to offer supportive interest rates to its clients but added that this should be in line with market practices.
Shiimi also noted that despite economic challenges, the bank should make sure that all farmers meet their loan obligations and continue to improve its debt collection. He further suggested that Agribank educates its clients on the importance of meeting their financial obligations to create a healthy revolving fund.
“Those clients who are genuinely struggling should be given a helping hand, but action should be taken against those who are deliberately neglecting their financial obligations,” he emphasised.
According to Shiimi, the bank has done well under very difficult circumstances and key financial metrics show positive trends particularly in terms of interest income and the management of expenses.
He said the bank has also registered a surplus despite having to increase its provisions significantly during the year, in line with international financial reporting standards. This is due to the impact of persistent droughts and the contracting economy.
Shiimi stated that despite good rains for 2020, global developments and outlooks are clouded with significant risks to economic growth, estimated at -4.4% in 2020, which is the lowest growth in the recent history.
“This situation was already aggravated by the prolonged droughts, and further worsened by unprecedented shocks due to the Covid-19 pandemic on the agricultural and related sectors. In light of the above, a credible fiscal adjustment will be essential to preserve macroeconomic stability and debt sustainability,” he stated.
However, he added that the policy change will need to be carefully designed to avoid choking off economic growth while safeguarding critical social and development spending.
“I am therefore looking up to the board and management to fully implement the newly approved Covid-19 economic stimulus and relief package to mitigate the negative impact of Covid-19 on the economy and to provide economic relief to retain jobs and provide livelihoods to the Namibians by providing loans at reduced interests,” said Shiimi.
The minister said the policy will enable Agribank to fully live up to its purpose, which will enhance the government’s efforts to make Namibia become food sufficient. Furthermore, Shiimi said he observed that there has been tremendous growth in the affirmative action loan scheme (AALs), which is designed to support the government’s land reform policy through which previously disadvantaged Namibians can acquire commercial farmland at reasonable interest rates.
“I am aware that there is a need to repurpose this programme with the view to better affirm our previously disadvantaged farmers in a manner that will not threaten the sustainability of the bank.
To enhance and improve the production of the resettled farmers, through a government resettlement programme, I would like the bank and government to work together to review the funding model toward resettled farmers to improve the productivity of those farmers,” Shiimi stressed.