Namibia: High default rate threatens Agribank sustainability
Farmers default over N$500 million which is the highest ever.The Agricultural Bank of Namibia (Agribank) is witnessing high default rate which threatens the sustainability of the bank. According to the CEO of Agribank, Sakaria Nghikembua, farmers default well over N$500 million which is the highest default noted. Out of N$2.4 billion loans issued by the bank, over N$500 million is yet to be remitted by the farmers. This represents an arrears-to-total-advances ratio of 21 percent, whilst the benchmark ratio for development financing institutions is 15 percent. The CEO of Agribank in a media chat last Friday made it known that the sustained high levels of unpaid loans would threaten Agribank's financial sustainability and its ability to deliver on its mandate in the long term. However, he disclosed that the bank is putting in place measures to recover the loans from farmers. "As part of the arrears collection strategy, the bank has appointed debt collectors to assist the agricultural bank [Agribank] in the collection of outstanding repayments from clients with effect of this month", he said. Further to this, he added that Agribank is working on initiatives to manage risk effectively. These include risk and compliance awareness sessions, implementation of a compliance testing plan, roll out of risk management and training of senior management on governance.