Agribank hunts down defaulters

front Sakiria March 2017A can of worms could be unearthed by Agribank’s aggressive debt collection exercise, amid allegations that millions of funds advanced by the bank could have been diverted by farmers.
Sources familiar with the debt collection exercise, which started last month, have told the Windhoek Observer that visits to farms of those owing the bank have unearthed shocking patterns, where the farmers are unable to account for the livestock bought using loans from the agricultural lender.
“The amount of abuse is shocking, imagine on one farm, where the owner received a loan to buy 1,500 cattle, people were shocked to discover that there were only three cattle at the farm,” a source familiar with the debt collection exercise said.
“These people are failing to pay back their loans, claiming that they do not have money, but what is surprising is that when they come to renegotiate their payment schedules, they are driving top of the range cars.”
Agribank CEO, Sakaria Nghikembua, however, denied the claims, saying the bank does not pay cash to its clients.
“We pay the seller of the farm and the seller of the livestock; so there are limited chances, if any, of abusing the loans,” he said.
Nghikembua refused to disclose the list of the bank’s defaulters, due to client confidentiality, but those close to the matter claim that the list contains names of politicians and well-connected businessmen.
Agribank took a more aggressive approach to its debt collection activities in January, which saw it subsequently roping in RedForce Debt Management and United Africa Group last month, on 12-month contracts, in a bid to recover the over N$500 million it is owed by defaulters.
“When you lend money, you need to get it back. When you get it back, you can lend to new clients. We have allowed people to develop the perception that this is a State-owned enterprise; therefore there is no need to pay back on time, and so on. It is a culture that we have allowed to continue,” Nghikembua said.
“They (farmers) are told to pay once a year, not every month. Once you are given the loan, you are given about 12 months to work on your farm, before you are required to repay. This effectively means you have a whole year to repay.
“We have clients who have not paid for more than three, four or five years. If we don’t get the money back, how do we manage to finance others?” Nghikembua said.
The bank was established in 2003 to finance agriculture and related activities.
Nghikembua said this week that RedForce Debt Management and United Africa Group were appointed after an extensive public tender process that had initially seen 14 companies apply.
He said the successful companies were appointed on the basis of their experience, expertise, IT systems and successful track records.
He rejected claims that the bank had moved ahead with its debt collection efforts, without following the proper procedures, saying they had written several letters, emails and messages, to inform clients that they should pay back their loans, but they were ignored.
Nghikembua added that the onus is on clients to either pay on time, or to make appropriate repayment arrangements with the bank, well ahead of time.
The Agribank executive said that some clients had taken loans, just to have farms to visit on weekends.
“How do you take a N$15 million loan and not want to pay back? If you have a farm and only go there on weekends, then it won’t be easy for you to pay back.
“You need a farm to produce, in order to pay back. Why shouldn’t you pay back? That is being selfish, when one refuses to pay. We know them all, who are trying to paint a bad picture of Agribank.
“The aim is not to repossess their farms. We are also not saying that they should pay today, but that they should make arrangements on when to pay, and then honour those arrangements. The bank just wants to get repaid for the loans advanced to clients,” Nghikembua said.
The former Mutual & Federal Managing Director was appointed as Agribank CEO in August last year, replacing Leonard Iipumbu, who went on to become Chief of Protocol.
Nghikembua could not say how much has been recovered so far, since they started with the debt collection exercise.
“As for actual flows, we will reconcile accounts month-end only,” he said.
Several farmers have started a WhatsApp group, which has also been discussing the unfolding debt collection efforts at Agribank.
Responding to a list of questions posted by the Windhoek Observer in the group on Thursday, one farmer said that he had heard that an Agribank client’s farm had been “listed to be sold”.
“I believe that the bank has a development mandate, and to sell people’s farms, houses or call up people’s investments should be the last resort,” he said.
“There are innovative ways that the bank can employ to recover its debts, without going the extreme way. If the previous CEO failed to recover the bank’s debts, you can’t punish the farmers for this. Yes, austerity measures must be engaged to help the bank get out of this predicament, because it can’t be business as usual.
“If a farmer is unable to repay his or her loans, the bank has an obligation to go out to assess the situation on the ground, to determine why the farmer can’t repay. This exercise would indicate that most farmers have depleted their livestock, because of various factors, over which the farmer has little control.”
He also listed reasons why some farmers had depleted their livestock, over time, saying that a contributing factor had been the difference between market value and Agribank’s valuation, at the time when the farms were purchased.
“Farmers had to sell off large numbers of cattle to payoff this difference, thus reducing their production capacity, before they entered these farms. The Government used to cover this difference, until the previous CEO misled GRN, that the GRN Guarantee was the factor pushing up the land prices.
“GRN thus withdrew this guarantee and the responsibility was shifted from GRN to the farmer, at great cost to the farmer.”
He added that after arriving at their farms, most farmers found that the infrastructure (water and fencing) was in a bad state of repair.
“Again this had to be repaired at great cost, without the bank’s assistance. This again depleted livestock numbers. Weather conditions also played their part to reduce livestock numbers, over time.
“Yes, all of the above-mentioned factors can be managed, but the bank has to play a fundamental role in this.  If farmers can be assisted to improve infrastructure, when they enter these farms, it would help them greatly to be more productive, and they would not have to rely on selling their animals to improve their infrastructure.
“During drought, farmers must be encouraged to reduce their livestock numbers, and invest the money with the bank, as has been the case before independence, for the white farmers.
“After the drought, farmers were given drought relief and assisted with restocking loans. There is no point in giving relief, without restocking loans, because the drought has depleted animal numbers, over time, thus making the farms unsustainable.
“The bank must establish a unit that must constantly go out to farms and monitor the farmers’ progress. After the unit is in place, the bank can apply to the veterinary office for a stock brand that can be linked to a specific farm.
“The bank can then assess individual farms and determine what loans can be restructured, to help these clients out of their current arrears. They can restructure these loans and offer these clients more livestock, but branded with the bank’s brand. These animals can’t be sold, without the bank’s consent, and proceeds should go towards the client’s instalments, and reducing their arrears.  
“This is just one of many proposals, which the bank can implement, to try to help the farmers not to lose their farms, thus reversing the whole land reform process.”
One farmer sent an SMS to The Namibian requesting President Hage Geingob to intervene in the matter.
“Mr President and Minister of Land Reform, if you can’t talk to the CEO of Agribank about what he is busy doing, do the honourable thing and buy all our farms and resettle us back on them, because we are trying to contribute to the economy and relieve the burden on land reform, but what the new Agribank CEO is busy with is going to cause trouble, if you don’t stop him. Foreigners are preparing to buy back our farms because of Agribank and RedForce. Viva Ambassador Leonard Ipumbu!”