Agribusdev struggles to pay salaries

10 May 2019 | Agriculture

The Agricultural Business Development Agency (Agribusdev), the agency that manages 11 green schemes, is struggling with serious cash-flow problems and has been unable to pay its employees on time for the past three months.

The managing director of Agribusdev, Petrus Uugwanga, told Namibian Sun that the company's cash-flow problem has been worsened by the economic situation in the country and last year's fall armyworm infestations at green schemes.

“The armyworm invasions at green schemes knocked us down and we have not recovered yet. Now we have better crops on the field and we are hopeful to recover,” he said.

According to documents seen by Namibian Sun for the months of February, March and April, there has been a delay in the payment of Agribusdev employees' salaries.

The agency had to request banks to be lenient with its staff members who could not meet their obligations to banks or third parties at month-end.

“Thus far all the employees have been paid. There comes a time just like any other institution that due to cash-flow problems employees are not paid on time.

“Buyers of produce are not paying on time, which has become frequent these days. We then find ourselves in a situation of not having resources to pay our workers, especially at the farm level,” said Uugwanga.

A notice sent out to employees last month informed them that there were no funds allocated to Agribusdev in the national budget for the 2018/19 financial year.

“From a financial point of view what this means is that Agribusdev does not have a budget to execute operational activities. This is because there is no basis on which to base our expenditure, as there is no promise of funds elsewhere, or realistic expectations that funds will come from anywhere.”

The notice said that staff should halt all expenditure while engagements take place with the agriculture ministry to secure funds for operation.

“As Agribusdev we currently do not have a budget allocation yet, we have made a proposal to the ministry on the allocation and we look forward to see an approval as soon as possible.”

He said that Agribusdev was still waiting upon the ministry, as the national budget debate was still ongoing in Parliament.

According to Uugwanga the operational budget for Agribusdev is about N$120 million.

“Agribusdev has handed their proposal for funding from the line ministry and this is estimated at around N$29 million.”

According to him this is less than the N$35 million they had requested from the ministry last year.

“Agribusdev has nine pay points and any of them can be affected in terms of late payment of salaries,” he explained.

Uugwanga also pointed out that Agribusdev is not creditworthy to financial institutions because it lacks assets that can be put up as collateral.

He further said that their business plan, which could have made them self-sustainable, was not funded. They needed about N$111 million over a period of five years.

Last year Agribusdev unveiled a daring business plan with which it hoped to generate N$1.8 billion in turnover and 4 000 temporary jobs.

This plan would only have worked if it received more than N$111 million to develop the state-owned green scheme projects to optimal capacity.

Agribusdev runs the Etunda, Hardap, Kalimbeza,Mashare, Musese, Ndonga Linena, Orange River, Shadikongoro, Shitemo, Sikondo and Uvhungu-Vhungu irrigation farms.

The assumption was that should the necessary development be done, all eight operational centres with the exception of the head office would post profits and the company would generate a turnover of N$1.8 billion from 2017 to 2022.

A total of 464 permanent jobs would be maintained, while about 98 additional jobs would have been created. Also over 4 000 temporary jobs would have been created.

The agriculture ministry recently instructed Agribusdev to choose only four green scheme projects to which the government can commit funding.

The rest of the green schemes will be leased to the private sector to cut down on the astronomical costs associated with the projects.

Uugwanga lastly stressed that Agribusdev does not have a board at the moment, which is compromising the leadership of the institution. He said the company needs a board as part of good governance.


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