Guest Contributor | Feb 22, 2024 | 0
Agribank adopts new credit appraisal norms
Agribank has adjusted its credit appraisal norms and repayment terms with immediate effect and have adopted a new pricing structure in its credit assessment assumption for livestock, linked to prevailing market conditions.
Sakaria Nghikembuua, Chief Executive Officer of Agribank said in a statement that the production norms in the cash flow assumptions used in the credit appraisal process have been aligned to the prevailing market norms and production environment. He added that they have further aligned the installment repayment cycles to the operational cash flows of the farming activities being finance.
“For the crop production sector, the main cash flow assumptions are the potential yield per hectare and production cost per hectare and are not fixed and fluctuate across farm units and production areas owing to variation in soil profiles, technical capacity and water availability,” he explained
“This requires that Agribank ensures that assumptions on the yield per hectare and production costs are aligned to the production environment and the current production used in the cash flow projection remained valid,” he emphasised. He further explained that this will occur while the prices of commodities have been increased and linked to the average floor prices of the Namibian Agronomic Board for the past five years.
He emphasised that the new prices are beneficial to existing and prospective clients as they are much higher than the previous prices, while increasing the scope of the qualifying amounts for clients with improved cash flow projects.
Sakaria also informed that the payment of installments has been aligned to the operating cash flow of the activity being financed. “For farming activities that are short term in nature, which include horticulture production as well as grain crop under irrigation and dry land amongst others, Agribank now offers a grace period of 8 months before loan repayment commences, while the grace period for medium-term activities such as livestock for speculation is now 18 months when compared to 12 months previously,” he said.
He further explained that the repayments for livestock weaner production loans for beginners will now be due in 24 months with a reduced loan term of 8 years, instead of the previous 12 months over a 10 year loan term.