DEPUTY finance minister Natangwe Ithete says Agribank defaulters must pay to avoid losing their "collateralised properties".
Ithete made these remarks in the National Assembly last week when he answered a question posed by Popular Democratic Movement parliamentarian Vipuakuye Muharukua.
The deputy minister also disclosed that 2 500 accounts of people owing AgriBank close to N$250 million were handed over to external debt collectors.
This came after the bank initiated an exercise to collect over N$500 million in arrears from loanees.
The exercise involves negotiations between the bank and farmers to make arrangements on how to settle their debts.
The bank has also started to list non-compliant farmers with the Information Trust Corporation (ITC) because they have refused to honour their debts, and have continuously ignored invitations to make repayment arrangements.
The bank has close to 6 000 clients, with a loan book value of N$2,4 billion. The government finances some of Agribank's loans through the Ministry of Finance, Ithete said.
He added that those handed over to external debt collectors would face legal action if they fail to comply with the debt collectors' instructions.
Because of the continual non-payment of debts by farmers, the bank would be forced to take legal steps that might end with repossessing and auctioning farmers' "collateralised properties", including their farms, a decision the politician said was not the bank's first choice.
"It is important to understand that whether the arrears are collected through internal channels or the employment of debt collectors, failure to honour loan payments will end in the repossession or sale of the financed and, if necessary, additional collateralised properties," he stressed.
Records show that the majority of the clients in arrears simply ignore to pay over many years, irrespective of the climatic conditions, Ithete said.
According to him, 68% of the arrears are as old as eight years, and some were for more than 15 years.
"Therefore, farmers should not hide behind the harsh drought conditions which the country experienced for the past four years. This indicates that most of the arrears extend beyond recent droughts. Some clients have been farming and marketing their animals or produce, but have not made any effort to repay their loans, and others have neglected farming," he said.
"Let those in arrears do the right thing, and repay their dues to enable the bank to serve others in future, or unsurprisingly deal with the consequences," he added.
Agribank's chief executive officer Sakaria Nghikembua last month also urged defaulters to start making "practical, fair and reasonable repayment arrangements" with the bank to avoid legal action or repossession of their properties.
He said the bank had made numerous calls to clients in arrears to make repayment arrangements, but some clients have decided to just stay away.
The debt collection exercise was also undertaken to collect cash to make sure that the bank remains financially stable to sustain its operations, and to be in a position to serve others in future, Nghikembua said.
Some farmers calling themselves "previously disadvantaged farmers" issued a statement last week, condemning the bank's actions as being insensitive.
"The actions of the Agribank CEO, together with the questionable debt collection agencies, to circumvent the bank's policies and procedures, without considering remedies as stipulated in debt collecting policy documents of the bank, raise more questions than answers.
The bank should assess the clients' position and negotiate for remedial action, with external debt collection agents as a last resort," the statement reads.
The farmers also rejected Nghikembua's claim that they had refused to honour their debts.