Namibia: Drought Pushes Agribank to N$16.7 Million Loss

Namibia’s agricultural premier lender, Agribank, incurred a loss of N$16.7 million during the financial year ending 31 March 2024, mainly due to drought.

This is a significant downturn from the N$49.5 million surplus achieved in the previous year.

According to the bank’s chief executive, Raphael Karuaihe, this loss can be attributed to a substantial increase in credit impairment losses, which escalated from N$2.8 million in 2023 to N$65.3 million in 2024.

“This alarming rise reflects the impact of recurring droughts on farmers, leading to an increase in loss provisioning cases and poor recovery of net bad debts,” he said when presenting the bank’s financial statements for the 2023/24 financial year.

He said the bank incurred a loss despite its interest income increasing by 5.46%, from N$244.1 million in 2023 to N$257.5 million in 2024, resulting from a growth in loans and optimal investment of surplus funds.

“The bank also benefited from a significant reduction in interest expenses, which decreased by 30.98%, reaching N$31.4 million in 2024, down from N$45.5 million in 2023, due to the settlement of significant funding facilities during the year,” he said.

In addition, total expenses surged from N$157.9 million in 2023 to N$188.6 million, due to expense alignment and increase in accruals and provisions for professional fees, legal provisions, filling of key executive and management roles, and inflationary increases in other expenses, he said.

The institution’s total assets declined slightly by 1.68%, culminating in a total value of N$3.44 billion, down from N$3.50 billion recorded in the previous financial year, Karuaihe highlighted.

He said in line with Agribank’s customer-centric focus, the institution had disbursed N$370 million in 2024, a significant increase from N$285 million in 2023, claiming a leading position in agricultural finance.

“Correspondingly, Agribank achieved a 6.59% growth in the total loan portfolio, with the total amount rising to N$3.13 billion in 2024 from N$2.94 billion in 2023.

“This success stems from efforts to streamline the loan process, improve sales channels and turnaround times,” Karuaihe said.

The chief executive said during the review period, Agribank held stakeholder sessions at agricultural shows and conducted one-on-one client visits, resulting in meaningful collaborations and valuable feedback to enhance services and product offerings.

“Agribank continued to offer valuable agri-advisory services, reaching 9 449 participants during the period under review. This reflects our ongoing commitment to empowering farmers with the knowledge and skills they need to succeed,” he said.

In addition, he said the bank strives to reduce loan turnaround times, particularly the credit application processing to ensure timely and efficient service delivery.

“We are making significant strides to modernise our core banking system and upgrade our front-end systems to enhance performance and deliver a better experience for our customers,” he added.

The bank launched a branch-on-wheels pilot initiative to enhance financial inclusion and expand its loan book.

This initiative covers the Oshikoto, Kunene, //Kharas, and Hardap regions, targeting underserved communities.

“Within two months of the pilot project, the bank successfully serviced 270 clients, demonstrating commitment to inclusivity and client convenience,” Karuaihe noted.

He said in the 2023/24 financial year, loans advanced to youth grew to N$58.3 million, from N$9.4 million in the previous year while loans for women increased by 94%, reaching N$26.8 million.

These increases are attributable to capacity-building initiatives and stakeholder engagements during the period under review. Agribank’s efforts to support these groups align with national objectives to empower youth and promote gender equality in Namibia.

Agribank’s loan schemes promote product and farming diversification, effectively balancing commercial and communal agricultural practices.

In promoting communal farmers, N$8.2 million and N$12.4 million was disbursed under the Emerging Retail Financing Product and salary-backed loans, in the 2023/24 financial year.

Agribank also invested N$3.7 million into the post-settlement support programme in line with the national land redistribution objectives.

By Namibian.