Agribank launches no-collateral loans but only if the farmer is employed full-time
Agribank’s CEO, Sakaria Nghikembua launched what he deems a revolutionary “No Collateral Loan Product” in Oshakati last week.
The no-collateral loan product is in line with the bank’s plan to respond to the call for inclusion of all farmers country-wide, especially those in communal areas who do not have access to conventional funding for a lack of collateral.
“The product therefore reaches out to communal farmers in a tangible and measurable way,” said Vice Chairperson of Agribank’s Board of Directors, Michael Iyambo, at the launch.
According to him, the product is targeted at salaried communal farmers who genuinely do not have fixed property in a proclaimed urban environment.
Iyambo explained that Agribank continues to provide financing for agricultural purposes against mortgage collateral and or fixed-term investments.
“As a bank, we decided to mitigate our lending risks. Instead of paying once-a-year, the client will repay the bank monthly. This makes it easier for clients to pay as they are now paying smaller amounts more frequently rather than paying a bigger amount once a year,” he said.
Iyambo noted that instead of paying via bank debit orders, Agribank will deduct via payroll to enhance the collections success rate. “Credit life insurance has been added to the product to ensure that the bank gets paid in the event a client’s death while still owing on the loan. This way, too, the client’s family have peace of mind as the bank will not claim anything against the deceased client’s estate,” he added.
Furthermore, Iyambo revealed that Agribank decided to support the funding of agro-processing industries in order to add value to basic agricultural produce, create employment and expand production in support of economic growth.
“Agro-processing, which is a form of secondary production, means that at a basic level meat can be processed into other products; beans can be processed and tinned; milk can be turned into butter and produced on a bigger scale; maize and mahangu grains can be milled and processed into flour, and so on,” he said.
At the launch Nghikembua said that it is of importance that Agribank is inclusive and reaches out to communal farmers as this increases food production at the household level. It also contributes to household food security and sets the stage for commercial farming while contributing to GDP and economic transformation, and it furthers the bank’s mandate.
Nghikembua said that the no-collateral loans would range between N$5,000 and N$500,000 and can be used to purchase seasonal inputs, livestock, agricultural machinery; as well as finance water and power infrastructure for farming such as fencing materials, pumps and tractors, amongst others.
The loan is repayable over a period of 12 to 54 months, with the key provision that the borrower’s employer must sign a payroll deduction agreement with Agribank before their employees can qualify for consideration.
Disbursements are made directly to the suppliers of goods and services.