AgriBank Posts N$9m Profit

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By Wezi Tjaronda WINDHOEK The Agricultural Bank of Namibia (Agribank) last year recorded a profit of N$9.1 million and an increase of 5.91 percent in its total loan value from N$1.27 billion to N$1.345 billion. Between 2003 and 2004, the bank recorded a loss of N$24.6 million, which was turned around to profitability last year. The bank’s annual report of 2005, released recently, says the profit was a result of a decrease in the provision for losses on bad and doubtful loans from N$89.6 million to N$30.06 million last year. The loan book value grew from N$642 million in 2000 to N$1.345 billion last year. While loans to commercial farmers grew, empowered commercial farmers who increased from N$153 million in 2000 to N$597 million in 2005 recorded the biggest growth. Corporate loans also increased from N$42 million in 2000 to N$234 million last year. Loans to communal farmers however decreased to N$62 million last year after growing from N$63 million in 2000 to N$124 million in 2004. Agribank, established to promote agricultural development and production through the provision of loans, offers long-term, medium-term and short-term loans to clients. Last year alone, the bank gave 1 127 long-term loans amounting to N$200.7 million. Long-term loans, which are given out at an interest rate of 9.75 percent are used for purchase of farmland, addition of farmland or expansion of activities, repayment of bonds and farm improvements in the form of water provision and fencing. A total of 1 220 clients are indebted to the bank to the tune of N$302.8 billion in the medium-term loan category. In this category, loans are given to clients for the purchase of large stock, male breeding stock, farming vehicles, tractors and implements as well as irrigation equipment. Short-term loans are for crop production and are repaid at an interest rate of 11.25 percent. Last year alone, the bank gave 610 Affirmative Action Loans (AAL) compared to 570 in 2004, while it gave 182 loans for workers’ houses. As for the tractor scheme, which started in 2000 due to the privatisation of ploughing services rendered to communal farmers to assist entrepreneurs acquire tractors and render the services, 235 loans were given out both in 2004 and 2005. Apart from the traditional loans, the Agricultural Bank Act of 2003 has broadened the capacity of the bank to finance other farming related activities, which complement the normal farming activities. Currently being investigated as potential new products to be introduced, says the report, are eco-tourism and aquaculture. Before the bank can take on this task, the report says, the bank’s marketing department will not only assess new products but also work in liaison with the Ministry of Fisheries and Marine Resources to compile a financing policy to accommodate future applications for fish farming funding. Applicants in this regard are expected to comply with regulations such as submitting a business plan, an aquaculture license and an environmental impact assessment. The prerequisite for considering applications in eco-tourism will be activities that are complementary to normal farming such as erection or renovation of guest accommodation facilities, recreation facilities, game-proof fences and purchasing of game.