THE Agricultural Bank of Namibia (Agribank) has offered farmers in arrears with payments a debt relief package that requires them to pay 45% of the arrears, and the bank would capitalise the balance.
According to a statement from Agribank chief executive officer Sackaria Nghikembua last week, the relief package comes into effect today, and those who want to benefit from it should approach the bank to conclude agreements.
The bank has been struggling to recover more than N$500 million in loans extended to farmers, and had to enlist the services of debt collectors in 2017.
By capitalising the balance on arrears, the bank would not consider the farmers to be behind with installments.
Agribank has put three options on the table as debt relief since most farmers have been defaulting.
According to Nghikembua, the bank would also give the farmers two additional years to settle the debts.
"Once a client has settled 45% of the arrears, they will also be delisted from the credit bureau if the bank had listed them," he said in the statement.
For those who cannot pay the required 45% at once, they had until 30 September to do so.
He added that, for the clients who will not be able to pay their annual instalment this year, they can pay 60%, and then the bank would restructure the remaining balance, as well as give them an additional two years to pay up.
"The relief option makes it easier for the clients. In the normal course of repayment, the client would have had to pay off the entire 100% of arrears before they can be delisted," Nghikembua said.
Agribank will also extend drought relief loans to farmers who would have met the relief package requirements.
The drought relief loans could also be used to buy fodder, drill or rehabilitate boreholes, and any other activity that benefits the farmers.
Nghikembua could not reveal last week how much the farmers owed the bank at the moment, or how much the debt collectors had recovered.
He said the details would only be announced at the upcoming Agribank annual general meeting.
However, the bank had noted an upward trend in collections over the past three years since they started their new collections strategy.
Since the contract of external debt collectors expired in April last year, the bank has been collecting the repayment itself, and the trend is undoubtedly positive, although not yet at the levels the bank wishes them to be.
Nghikembua also noted that although they have been signing repayment arrangements with clients who have been in arrears for many years, it would take time to normalise the situation.
"We are facing challenging times for both our clients and the bank. We want both to survive. We are trying to balance so many considerations to ensure our clients receive some scope to make it through this difficult period," he stated.
The main reason for extending the drought relief package is the uncertain weather patterns over the next few years, and the inability to determine the rate at which farmers will adopt climate change resilient strategies to cushion their farming activities next year, the bank chief said.