Agribank takes advantage of the disaster

EXPLOITED FARMER WRITES:I feel obliged to respond to an article in the Republikein of 3 September 2021 in which the Agricultural Bank of Namibia boasted with good financial results. When one looks at the operations of the Bank, I tend to feel that this is not an earned performance in a competitive environment. The bank is treated with a soft hand at the expense of the poor farmers. I am particularly surprised by the finance minister who praises the Bank’s performance while he gives the Bank state resources on a silver plate.In September 2019, the prime rate in the country was 10.25%. At that time, the Bank offered its drought relief at a rate of 9.5%. That was 0.75% below prime. With the advent of Covid-19 in order to give the consumers some needed relief, central banks reduced lending rates and commercial banks followed suit. In Namibia, I noticed that if the central bank announces a reduction in repo rate, the commercial banks followed within a period of less a week.In Namibia the prime lending rate fell from 10.25% in late 2019 to 7.75%. This welcome debt relief of 2.5% has been passed onto the consumers by the major commercial banks following the announcement by the central bank. To the contrary Agribank passed onto the borrower only 0.45%, denying the burdened borrower a whopping 2.05%. Ironically, the talk about hard times due to the pandemic whilst the Covid-19 brought them Manna from heaven. In fact, the Agribank borrower has been ripped off. They started with a position of 0.75% below prime and now they stand at 1.25% above prime, why is the Government happy with this?To add insult to injury, this year the Minister of Finance allocated them N$90 million of public money for the Bank to lend out at 9.05%. We see every night on national television that the FNB home loan lending rate is 8.75%, Agribank gets free state resources and lends at 9.05%, and call this an affirmative action loan – what a joke? This is unfair financial practice subsidised by the state. If one looks at the opportunity cost of money, 9.05% that Agribank charges will be obtained nowhere else in the local financial market, only through the exploitation of the already disaster-stricken farmer.The percentages discussed above may seem insignificant but if you apply them to loans in millions, you will realise how the Agribank borrower is denied a benefit that is rightfully his. For example, on a loan of N$1,000,000 the commercial borrower enjoys a relief of N$25,000, whilst the Agribank borrower gets only N$5,000 – who is happy to forfeit N$20,000 per year?It should not be forgotten that in 2019, during the drought, the president declared a state of emergency and called upon public institutions to assist. Agribank took the opportunity to grow their loan book and with another disaster a year later, they do not come to the table and instead of being called to order they receive praises. This is amazing!I trust the parliamentarians will take their job more seriously and protect those they represent. It looks like they might have been sleeping on duty when they approved the N$90 million public money to be lent to the same public at exorbitant rates of interest beyond the market rates in the name of affirmative action.

Agribank takes advantage of the disaster

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Republikein 2025-03-07

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Agribank takes advantage of the disaster

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Republikein 2025-03-07

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