AgriBank owed N$213m by defaulters

WINDHOEKELVIS MURARANGANDA

The Agricultural Bank of Namibia (AgriBank) is owed N$213 million by borrowers, who are now in arrears with their payments. This was revealed in an auditor-general's (AG) report on the accounts of the bank for the financial year ended March 31, 2012.
According to the AG, Junias Kandjeke, while the bank has adequate security in place for most of its loans, the impact of poor debt collection on its liquidity remains a cause of concern.
The money represents almost 13% of the gross loan book for the financial year under review. The bank has, however, managed to decrease the arrears by N$7 million, compared to the previous financial year. “The audit is concerned about the inadequacy of credit controls exercised by the bank,” said Kandjeke, adding that these are some of the critical issues facing the bank.
“These deficiencies results in low recovery rates on its scheduled loan instalments due by customers.” According to him, for the past two years financial years (2010/11 and 2011/12), the recovery rate remained below 20% - a trend which has continued.
The AgriBank was established in 1907 and provides production loans, which cater for the acquisition of necessary farming products, livestock loans for the purchase of animals to restock farmland, infrastructural loans to acquire new equipment and implements, as well as vehicle and tractor loans.
According to a source at the bank the money in arrears is accumulated from different types of loans awarded to farmers. Meanwhile, the central government has settled a loan amount of more than N$210 million - an amount AgriBank borrowed from the African Development Bank (ADB) - with its last instalment being N$11 million.
For the past 20 years, a total of N$10 million was paid every year to settle the interest-free loan.
AgriBank borrowed a further amount of N$6, 5 million from Bank Windhoek to renovate its headquarters in Windhoek, which becomes repayable only after AgriBank utilises all the funds.
Under the government tractor scheme which is managed by the bank, a balance of N$34 million for 2011 and 2012 was recorded. The scheme involves the sale and charges on lending tractors to communal farmers.