Agribank delivering real enterprise value to the economy

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December 2011/January 2012
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Background

Agricultural bank of Namibia (Agribank) is Namibia’s sole agricultural finance institution that raises money on the money market for on-lending to clients such as farmers, corporate projects, the Green Scheme, aquaculture, companies, co-operatives and individuals with an interest in agriculture development for sustained food security and job creation.

The CEO Ambassador Leonard Iipumbu’s Vision:

My vision of the Agribank into the future is to provide sound leadership and build a strong financial institution through the pre-requisite of a high return on human capital employed, enhanced effectiveness, efficiency and professionalism as well as increased performance and accountability at all levels, in order to satisfy the needs of our clients and stakeholders, fulfil our mandate and commit fully to the requirements of good corporate governance.

Mission

The Agricultural Bank of Namibia invests capital, skills and knowledge into agriculture and related activities by providing affordable sustainable financial solutions.

Loans

By September this year, the bank approved N$192m loans since the beginning of the year, benefiting 518 Namibians, creating or maintaining an estimated 1 560 permanent jobs.

Of that amount, N$76.8m was approved to the purchase of commercial farmland benefitting 27 previously disadvantaged Namibians while an amount of N$60.8m was approved for livestock and N$14.5m was approved for take-over agricultural related debts from other financial institutions. A total of 361 of the 518 beneficiaries are small-scale farmers in communal areas under the National Agricultural Credit Programme (NACP) to the value of N$44.3m.

Both communal and commercial farmers engage in beef production, which constitutes 87% of gross agricultural output. Livestock farming constitutes 85% of the agricultural farmland in Namibia.

This year, Agribank embarked on a scheme that will consider advancing loans to communal farmer without the need for them to furnish the bank with any form of collateral, if a study that is currently being commissioned by the bank is accepted.

Agribank is seeking for the services of a consultant for the development of a comprehensive agro-financing scheme to identify opportunities in the value chain that would be explored, in order to assist small-scale farmers in communal rural areas to access finance without the need for collateral.

This, according to Agribank’s Manager for Corporate Communications, Regan Mwazi, was necessitated by the need for the empowerment of communal farmers in the country, as crop production has fallen drastically over the years.

The northern regions constitute less than 15% of the approved loans under NACP to date from January this year. This nominal percentage is mainly due to the mortgage collateral requirements that are quite restrictive to small-scale farmers in communal rural areas. Agribank has a total loan book of N$1.59b from where the Agribank Kavango branch has an N$8.8m while Oshakati branch has N$52.6m share.

Farms are threatened by bush encroachment, which is a serious threat to sustainable livestock production, according to the Vice Chairman of the Agribank board.

Training

Agribank took on board the implementation of the Farmers’ Support Programme (FSP) with financial assistance from Gesellschaft für Internationale Zusammenarbeit (GIZ) last year and immediately made financial commitment to extend it to the communal areas.

The N$5m program financed by the German government will run over a period of three years having started in January last year. It now includes communal and resettled farmers and has seen Agribank injecting an additional N$2.5m to its operation. The project has a total of 29 mentors of which 24 specialise in livestock, three in livestock and two in horticulture.

To date, approximately 990 small-scale farmers have received mentoring under the FSP.

The provision of appropriate assistance (to communal farmers in particular) will contribute positively to Government’s fight against food scarcity in the country.

As part of fulfilling the bank’s commitment to good corporate governance, in October, Agribank conducted a workshop on good governance to equip employees with the principles and guidelines of good governance for effective discharge of duties.

The Permanent Secretary and Executive Director of State-owned Enterprise Governance Council (SOEGC), Frans Tsheehama has called for the upliftment of good corporate governance policies in State-owned institutions to improve operations and service delivery.

He also commended Agribank for setting some of the best governance policies and training its employees on corporate governance going forward.

“This workshop is taking place at a time when Government is repeatedly calling for efficiency , effectiveness, transparency and good value for money in the carrying out of responsibilities assigned to us by the people of Namibia. You have indeed set a good example worth emulating by all other SoEs in the country,” said Tsheehama.

The workshop was facilitated by Mumba Kapumba from MSK Management and Governance Council; a corporate governance consultancy firm from Zambia.

Achievements
so far

1992 Loan Book - N$10m

2011 Loan Book - N$ 1.59b

620 Total Farms acquired AALs at a cost of N$691m

264 Total farms acquired under commercial products for N$143m

A combined total of 5.4million hectares have been acquired at a cost of N$834m