Staff Writer
Agribank has announced that it will offer farmers a 12 month installment holiday as part of the bank’s measures to cushion them against the negative impact of COVID-19.
“Qualifying clients of Agribank are not mandated to pay the installment for a period of 12 months from the effective date of the Bank’s COVID-19 Relief and Stimulus package. The installment and the interest applicable to that installment will be capitalized,” Agribank CEO Sakaria Nghikembua said.
“Existing arrears will not be capitalized; penalty interest of 1.5 percent will apply on arrears for relief period (down from 2 percent) and installments that fall due during the relief period will be capitalized and an additional year will be added to client’s loan term.”
He said its interest relief measures will cost the bank N$43 million.
“We are forgoing N$43 million as part of the interest rate adjustments,” Nghikembua said.
This comes as he also announced that the bank is in the process of finalising funding arrangements of N$200 million to provide loans to farmers and agri-businesses to stimulate production and help farmers to diversify income to withstand variable weather conditions and pandemics such as COVID-19.
Nghikembua said although commencement date of issuing the stimulus loans is still to be announced, they will carry a grace period in line with the production cycle of their intended use.
“The usual prudent and risk-based credit assessment criteria will apply, as do normal terms and conditions of these loans. The stimulus loans carry a grace period in line with the production cycle of the intended use of the loan. The maximum grace period is 12 months from the date of loan disbursement. Normal loan recovery procedures will apply to defaulting clients after the grace period,” he said.
He said contrary to public assumptions about the loan program, government was not providing the funds but had offered the bank a guarantee.
“We are at an advanced stage of sourcing fairly affordable loans based on the guarantee and we will be raising the funds locally. The loans will be locally denominated,” Agribank CEO said.
Asked if the bank and government had already finalized the guarantee agreement, he said, “We have an absolute commitment from the Ministry of Finance and they are committed. We are happy with the assurances received and the support from the ministry.”
Nghikembua said as part of relief measures to farmers, the bank will de-list clients from ITC that make a 10 percent payment on their arrears compared to the previous 100 percent requirement and clients’ loan accounts will be restructured upon payment of 20 percent of the amount in arrears.
“This means that a client wishing both to be de-listed and restructure their loan, will be required to pay 20 percent of their arrears prior to de-listing and restructuring. Viability of the farming business after restructuring must be proven as part of the assessment process. On successful restructuring of a loan account, bank policy allows for an additional two years to be added to the loan term,” he said.
“This means those clients that have good relationships with commercial banks are in a position to access finance from other financial institution in their personal capacity.”
Nghikembua said the bank will halt any legal action against farmers who can prove that they have been negatively impacted by COVID-19.
“If legal action has started but not yet completed – the bank will pend legal action subject to the client consenting in writing to judgment and proof of COVID-19 impact or applicable down-payment on the arrears for restructuring. If legal action has not yet started – the bank will not institute action if the impact of COVID-19 is proven or upon applicable down-payment on the arrears for restructuring,” he said.
