46 000 jobs through Agribank

Healthy results in a tough climate

26 September 2019 | Banking

ELLANIE SMIT



Agribank has created or maintained 46 816 direct jobs in the agriculture sector during the 2018/19 financial year, compared to 45 232 jobs during the previous financial year.

“By creating about a third of all jobs in the agricultural sector, the bank plays a very important role in income generation and poverty alleviation,” Agribank CEO Sakaria Nghikembua said.

Nghikembua said yesterday the bank recently announced a solid set of results for the year ending 31 March 2019, following its annual general meeting (AGM).

He said despite the difficult operating environment, characterised by severe drought and an economy in recession, the bank delivered a healthy set of results.

Nghikembua said the bank's total assets grew by nearly 7% year-on- year, exceeding the N$3 billion mark for the first time in its history.

Total assets stood at N$3.011 billion at the end of March this year, compared to N$2.82 billion the year before.

According to Nghikembua the bank’s loan book grew by 15% year-on-year, from N$2.4 billion in 2018 to N$2.8 billion in 2019, while arrears stood at about N$530 million.

He said the growth in the loan book came largely on the back of new business growth.

Loan disbursements were 22% up from the previous year, increasing from N$358 million in 2018 to N$438 million in 2019.

Of the N$438 million, a total of N$41 million was disbursed exclusively to female clients, compared to the N$42 million in 2018, while N$50 million went to youth (below 40) in 2019, compared to N$98 million in 2018.

A total of N$30 million was disbursed to communal farmers without collateral in 2019, compared to the N$26 million in 2018.

Nghikembua said as a result of the increase in loan disbursements, interest income grew 14.5% from N$189 million in 2018 to N$216 million in 2019.

Expenses were well-contained at a growth of 4.4%, while the bank's surplus increased 87% from N$30 million in 2018 to N$56 million in 2019.

Expenses decreased from 10% and 17% in 2015 and 2016, respectively, to 11% in 2017, 7.8% in 2018 and 4.4% in 2019.

Nghikembua explained that the bank’s major expenses are staff, professional services, consultancy services for audits, computers and travel and accommodation.

He said the bank continued to roll out its salary-backed no-collateral product for communal farmers, disbursing N$26 million in new loans.

Since April 2017, the bank has disbursed a total of N$61 million in these loans to communal farmers.

In addition, the bank also introduced a no-collateral loan product for full-time communal farmers called the emerging retail financing product (ERFP) in May 2018. A total of N$4.5 million was disbursed to communal farmers under this product during the financial year.

The introduction of the two no-collateral loan products makes it possible for communal farmers to access funding for agricultural purposes, with clients using the loans for livestock acquisition, water and electricity infrastructure, tractors, implements and fencing, amongst others.

Nghikembua said the arrears ratio has also been reduced from 20.2% in 2016 to 19% this year. According to him the bank aims to reach 15% by 2020, which is the benchmark for financial institutions.

During the same period, the bank registered a consistently increasing surplus position, in line with its sustainability strategy. Collections have steadily grown from N$157 million in 2015 to N$296 million in 2019.

The bank made use of external collectors during various periods and collected N$11.5 million in 2017, N$82.4 million in 2018 and N$4.3 million this year. Currently, the bank is making use of internal staff.

“Despite the current depressed economic and harsh climatic environments, reasonable progress continues to be made on the collections front, as more customers positively respond to the bank’s call to service their loan accounts.”

Nghikembua said clients have become increasingly supportive.

He stressed there is still critical work that remains and this includes reducing arrears to cement sustainability. He said the bank is dealing with loans that have sometimes been arrears for up to 10 or 15 years.

The bank also took 6 453 farmers and farming employees through its training and mentorship interventions in 2019.