Agribank unveils relief and stimulus package
By Business Reporter
AGRICULTURAL lender, Agribank, has announced a package of relief and stimulus measures, which come into effect on 1 June 2020 and designed to assist farmers amid Covid-19.
Announced this week by Sakaria Nghikembua, Agribank’s Chief Executive Officer, the package was developed after an extensive consultation process with key stakeholders in the agricultural sector, as well as the bank’s shareholder.
“As a caring partner, Agribank would like to invite farmers to make use of the relief and stimulus measures put in place. We see this as an opportunity for our clients to re-set their farming business operations and we are pleased to be able to extend a helping hand to them in these challenging times,” Nghikembua said.
The package consists of instalment relief in which to qualify, clients will have to apply for the relief and demonstrate that they have been affected by Covid-19.
“Clients will be treated on a case-by-case basis upon merit. The instalment holiday will be for a period of 12 months. This means that from 1 June 2020 to 31 May 2021, Agribank clients who will qualify for this relief measure will not be mandated to pay their annual instalment. The repayment holiday applies to capital and interest on that instalment. The instalment will be capitalised, and an additional year will be added to the client’s loan term.
“Clients receiving the relief, who wish to keep to their original loan term, are free to do so. Existing arrears will not be capitalized but the penalty interest applicable to such arrears will be reduced from 2% to 1.5% during the relief period (i.e. the 12 months) after which period the penalty interest will revert to the original 2%. If a client has qualified for relief, the instalment holiday will apply to all loans which a client might have with the bank. Normal loan payments will resume after the instalment holiday period,” said Nghikembua.
Interest rate relief for the different bank products will be adjusted in that rates above 8.5% will be reduced by 0.5%, rates between 8.1% and 8.49% will be reduced to 8%, rates below 8% will remain as is and penalty interest on arrears will be reduced from 2% to 1.5% during the relief period, where-after such penalty interest will revert to 2%.
“The bank is in the process of finalising funding arrangements to provide loans to farmers and agri-businesses to the value of N$200 million to stimulate production and help farmers to diversify income streams for enhanced resilience to be able to withstand variable weather conditions and pandemics such as COVID-19. Clients are advised that the commencement date of such stimulus loans will be announced in due course.
“The usual prudent and risk-based credit assessment criteria will apply, as do normal terms and conditions of these loans. The stimulus loans carry a grace period in line with the production cycle of the intended use of the loan. The maximum grace period is 12 months from the date of loan disbursement. Normal loan recovery procedures will apply to defaulting clients after the grace period,” said Nghikembua adding that there will also be relief in terms of ITC de-listing and restructuring.
“For pre-legal clients de-listing will be done on payment of 10% of the client’s arrears; whilst restructuring of any of the client’s loan accounts will be effected on payment of 20% of the arrears. This means that a client wishing both to be de-listed and restructure their loan, will be required to pay 20% of their arrears prior to de-listing and restructuring. Viability of the farming business after restructuring must be proven as part of the assessment process. On successful restructuring of a loan account, bank policy allows for an additional of two years to be added to the loan term.
“For legal clients de-listing will be done on payment of 10% of the client’s arrears. A client will pay 20% of their arrears for restructuring if such a client is up to date with their repayment arrangement; if not up to date with repayment arrangements, the client will be expected to pay 30% of their arrears before restructuring can be implemented. The viability of the client’s farming business must be proven and a business plan of how such a business will be turned-around is required. An extension of up to two additional years can be made to the term of a restructured loan,” he added.